Hong Kong, China shares fall as investors steer clear of risk

* HSI down 1.2 percent, H-shares index down 1.5 percent

* Shanghai Comp down 1 percent, CSI300 off 0.8 percent

* Retailers down, Esprit drops another 12.4 percent

* China Inc earnings to continue to disappoint: C.Suisse (Updates to close)

By Vikram Subhedar

HONG KONG, June 14 (Reuters) - Hong Kong shares fell on Thursday, led by losses in the retail sector and Chinese large-caps, as more weak U.S. economic data and the Greek election this weekend gave risk-averse investors little reason to take big positions.

The Hang Seng index drifted lower through the day to end near the day's lows, down 1.2 percent with major mover Esprit Holdings down more than 12 percent, while the China Enterprises index fell 1.5 percent.

Mainland markets fared slightly better with the Shanghai Composite down 1 percent and the large-cap focused CSI300 d o wn 0.8 percent.

Turnover on the Hong Kong stock exchange fell to $4.5 billion, the second-lowest this year, as investors continued to trim positions as debate about the euro zone's future raged on.

Many Greeks pulled their cash out of banks and stocked up with food ahead of an election on Sunday that a great many citizens fear will result in their country being forced out of the euro.

"The volumes today speak to how people are approaching this weekend," said a Hong Kong-based trader at an American brokerage.

"I would also caution that the timelines for any serious reform (are) still years away and the immediate risks are still very palpable," the trader said.

Chinese large-caps were the biggest drags on the Hong Kong benchmark with China Mobile down 1.5 percent and oil major Sinopec down 2.8 percent. China Life shares fell 2.3 percent, giving back some of this week's gains, but were still up 7 percent since last Friday's close.

Trading volumes in Hong Kong have fallen to levels last seen at the depths of the financial crisis in late 2008, after a brief rise in activity in the first quarter as markets rallied.

Average daily turnover on the Hong Kong exchange is now threatening to fall below $6 billion a day, something that has happened only twice since the financial crisis. Average daily turnover since the start of 2008 is around $8.6 billion, according to Thomson Reuters data.

ESPRIT SLIDES

On Thursday, the most actively traded Hong Kong stock was Europe-focused retailer Esprit Holdings which lost another 12.4 percent in over 8-1/2 times its 30-day average daily traded volume.

The resignation of the company's chairman a day after the chief executive quit has spooked investors who have rushed for the exits, slashing the company's market value by about a third since Tuesday.

Despite the sharp drop, its shares were still trading about 25 percent above the intra-day lows seen last September.

Elsewhere in the retail sector, consumer goods exporter Li & Fung fell 2.8 percent on expectations of weak demand from U.S. retailers.

China Kingway Brewery shares slumped 5.5 percent after a source told Reuters that Beijing Yanjing Brewery had dropped out of the race to buy some of its assets, threatening a $700 million deal.

Compounding weakening demand from the West, Chinese companies are likely to remain under pressure from a slowdown in China, according to Credit Suisse.

"The biggest challenge will be on the earnings front," said analysts Peggy Chan and Vincent Chan in a note to clients.

Assuming real GDP growth around 7 to 8 percent and inflation around 2 to 3 percent, sales growth of industrial enterprises is likely to be in the low teens range, the brokerage estimated. That compared with average sales growth of around 19 percent per year between 1993 and 2011.

Against that backdrop, the brokerage remained "underweight" cyclical sectors such as materials and industrial in its model portfolio.

Chinese premium liquor makers, which are still showing relatively healthy earnings growth, offered some support for domestic benchmark indices. Kweichow Moutai rose 2.6 percent while smaller rival Wuliangye rose 2.9 percent. (Reporting by Vikram Subhedar; Editing by Daniel Magnowski)