China stocks erase gains on new share supply;HK up

* Trading volume in Hong Kong slips to one-month low

* Metals plays gain on higher commodity prices (Updates to close)

By Jun Ebias and Claire Zhang

HONG KONG/SHANGHAI, Feb 2 (Reuters) - Shares in China erased earlier gains, ending down 0.23 percent on Tuesday at the lowest close in 3-½ months, pressured by heavy new share supplies.

Hong Kong stocks pared gains to close up 0.14 percent, but the volume of trade slipped to a one-month low as most investors stayed on the sidelines fearing more monetary tightening measures in China.

The Shanghai Composite Index .SSEC ended down 6.647 points at 2,934.713, off a 1.05 percent gain at midday.

A major new listing in Shanghai fell below its IPO price on its debut, the second in less than a week.

Losing Shanghai A shares outnumbered gainers by 557 to 326. Turnover remained sluggish at 97 billion yuan ($14.21 billion), up slightly from Monday's 95 billion yuan, as trading wound down ahead of a week-long holiday for the Lunar New Year, which this year falls on Feb. 14.

Tuesday brought additional news on new share supplies and liquidity tightening that have been weighing on the market.

Huatai Securities said on Tuesday it would launch a Shanghai IPO this week that analysts said could raise up to 16.5 billion yuan, making it China's largest IPO so far this year. [ID:nTOE6100AY]

Investors have grown increasingly wary of new listings, with China Erzhong Heavy Industries (601268.SS) falling below its IPO price on its debut on Tuesday to end at 8.15 yuan, down 4.12 percent from the IPO price of 8.50 yuan.

On Jan. 28, China XD Electric (601179.SS) became the first mainland listing in 5-½ years to end its debut day below its IPO price. On Tuesday, it sank 4.92 percent to 7.34 yuan, still below its IPO price of 7.90 yuan.

China State Construction Engineering (601668.SS), China's largest homebuilder, which listed in July of last year, slipped 0.71 percent to 4.19 yuan, approaching its IPO price of 4.18 yuan.

"IPOs are still coming at too fast a pace and there are too many of them on the horizon. The market is still suffering from liquidity pressures, but after the recent sell-off, the index is expected to hold stable before the Lunar New Year," said Zhang Gang, strategist at Central Securities in Shanghai.

Beijing Dalong Weiye Real Estate Development (600159.SS) was the biggest loser in Shanghai, down by its 10 percent daily limit at 15.40 yuan after saying it was penalised by the authorities for failing to complete a Beijing land deal on time.

Metals issues were lifted by rising commodity prices, with Shandong Gold (600547.SS) up 5.12 percent at 66.35 yuan after gold prices posted their biggest daily gain in three months overnight. Jiangxi Copper (600362.SS) climbed 2.31 percent to 33.62 yuan on rising metals prices.

In Hong Kong, gold counter Realgold Mining (0246.HK) climbed 6.62 percent and Jiangxi Copper (0358.HK) rose 1.67 percent.

HONG KONG TURNS LISTLESS

The benchmark Hang Seng Index .HSI ended up 28.43 points at 20,272.18, after earlier climbing to as high as 20,533.96. Trading turned volatile in the afternoon session, with the key index fluctuating in and out of positive territory.

Turnover fell to HK$62.44 billion ($8.04 billion), the lowest in four weeks, from Monday's HK$67.1 billion.

For HSI technicals, click here

The China Enterprises Index .HSCE of top locally listed mainland Chinese stocks was down 0.44 percent at 11,570.35.

"Market sentiment is still cautious," said Nicholas Yeo, investment manager at Aberdeen Asset Management. "Volume is still rather weak. Maybe a lot of investors are staying on the sidelines. The biggest fear is the timing of the withdrawal of stimulus measures. If they are withdrawn, there are concerns whether the recovery, especially in developed economies, will be sustained without these measures."

CVM Minerals (0705.HK) dropped 16.28 percent to HK$0.365 when it resumed trading on Tuesday. The company said it was selling shares at HK$0.36 each, a 16.3 percent discount to its closing price before it was suspended on Monday.

Lender Industrial and Commercial Bank of China (1398.HK) ended down 1.21 percent. The stock rose as much as 1.7 percent earlier after the bank said its total new loans in January were lower than a year earlier.

China Merchants Bank (3968.HK) ended up 2.3 percent. The lender was up as much as 3.3 percent earlier after it said it won approval from the Chinese stock regulator for a rights issue to raise up to 22 billion yuan to replenish capital.

China's banking regulator has ordered lenders to conduct checks on whether any of their loans have illegally gone into the stock or property markets, a banking source told Reuters on Monday. [ID:nTOE610090]

HyComm Wireless Ltd (0499.HK) surged 26.32 percent, after it said it was in initial talks with Stanley Choi and Cai Dabiao, founder of China's Real Kungfu fast food chain, to form a consortium to acquire Fu Ji Food and Catering Services (1175.HK).

Macau casino operators gained on reports that gambling revenue in the enclave rose to a new high in January. Sands China (1928.HK) was up 2.71 percent. [ID:nTOE61102O]