Hong Kong shares close down 1.2 pct in 2nd straight loss

HONG KONG, April 10 Tue Apr 10, 2012 4:06am EDT

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HONG KONG, April 10 (Reuters) - Hong Kong shares suffered a second straight loss on Tuesday, dragged lower by banks after a four-day holiday weekend during which weak data from the United States and higher-than-expected inflation in China dented risk appetite.

The Hang Seng Index closed down 1.15 percent at 20,356.24. The China Enterprises Index of the top mainland listings in Hong Kong finished down 1.38 percent at 10,596.91.

The Shanghai Composite Index reversed early losses to end up 0.88 percent at 2,305.86 led by developers, but A-share turnover was weak, some 24 percent below its 20-day average.

HIGHLIGHTS:

* The Hang Seng Index closed at a 2-1/2-month low and finished below 20,450, the 23.6 percent Fibonacci retracement of its move from the October low to February high, and a level that had served as support for the previous four sessions, suggesting the possibility of more losses to come.

* Hong Kong markets were barely swayed by mid-morning data on Tuesday that showed China swinging to a surprise trade surplus of $$5.35 billion in March as import growth eased from a 13-month peak. But along with data on Monday that showed China's annual inflation rate jumping more than expected in March to 3.6 percent, expectations of near-term monetary policy easing could be doused if other data later this week comes in stronger than expected.

* Chinese banks were mostly weak as a result, with China Construction Bank Corp shedding 0.7 percent and among the top drags on the Hang Seng Index.

DAY AHEAD:

* Figures for China's foreign exchange reserves, money supply and loan growth are expected from Tuesday to Sunday, with first-quarter GDP and March industrial output, urban investment and retail sales scheduled for Friday. (Reporting by Clement Tan; Editing by Chris Lewis)

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