Hong Kong flat, China weak as transport stocks hit bumps
* HSI ends flat, H-shares index down 0.2 percent
* CSI300, Shanghai Comp both slip 0.2 pct
* Chinese railway stocks drop on Credit Suisse report
* HKEx shares down 2.6 pct on bond plan, low trading volume (updates to close)
By Vikram Subhedar
HONG KONG, Sept 25 (Reuters) - Hong Kong shares ended little changed on renewed concerns over global growth, and after China's central bank dampened expectations of a cut in banks' reserve requirements by injecting a record amount of funds into the market on Tuesday.
The Hang Seng index ended the day flat at 20,698.7 while the index of top Chinese shares listed in Hong Kong fell 0.2 percent, pulled down by transportation stocks.
In China, the CSI300 of the top Shanghai and Shenzhen listings as well as the Shanghai Composite lost 0.2 percent each.
Materials and financials - the two sectors that rebounded the most following the U.S. Federal Reserve's Sept. 13 announcement of a third round of asset purchases - continued to see profit-taking as investors lock in gains ahead of the quarter-end.
Chinese markets, poised to suffer a third straight year of losses, have stayed weak as Beijing has held back from more direct measures to tackle slowing growth such as cutting interest rates or reducing the amount of cash banks need to keep with the central bank.
Early on Tuesday, the People's Bank of China (PBOC) said it would inject 290 billion yuan ($45.96 billion) into the banking system through reverse bond repurchase agreements.
"The PBOC's reverse repos today have dampened expectations for any imminent RRR cuts," said a Hong Kong-based trader at a Chinese brokerage.
A surprise drop in German business sentiment as well a weak forecast from industrial bellwether Caterpillar Inc had hurt Asian markets, giving investors little reason to chase this month's rally in Hong Kong.
The Hang Seng index is up 6.2 percent this month led by transportation, machinery and mining stocks as investors returned to cyclical sectors beaten down on worries over China's slowing economy.
'UNDERWEIGHT' RATING FOR RAILWAYS
Railway equipment stocks fell on Tuesday after brokerage Credit Suisse rated the sector as "underweight" as it expects delayed orders and funding constraints to lead to more cuts in earnings forecasts.
China Railway Construction fell 1.8 percent and China Communications Construction was down 2.1 percent. China CNR Corp fell 0.3 percent.
Railway stocks had been among the biggest beneficiaries earlier this month when reports of Chinese infrastructure project approvals amounting to almost $1 trillion sent Hong Kong and China markets surging.
Tuesday's weakness in railway stocks spread to shippers and port operators with China Shipping Development down 5.4 percent. It was the biggest loser among components of the China Enterprises Index in Hong Kong.
A pullback in gold prices to a 1-1/2 week low overnight weighed on mining firms, with biggest Chinese producer Zijin Mining and its rival Shandong Gold both dropping 3 percent.
The heavyweight financials sector was a drag on Hong Kong and Chinese indices.
Hong Kong Exchanges & Clearing (HKEx), the world's No. 2 exchange operator by market value, fell 2.6 percent and was the top loser and heaviest traded stock among Hang Seng constituents on an otherwise lacklustre day for volume.
The company said it would raise $500 million via convertible bonds for its proposed acquisition of the London Metals Exchange.
HKEx, which still derives the majority of its income from trading commissions, has suffered as trading activity in Hong Kong has remained stubbornly low in 2012.
Daily turnover in Hong Kong averages just more than HK$50 billion ($6.45 billion) at present, compared with around HK$70 billion ($9.03 billion) at the same time last year. ($1 = 7.7525 Hong Kong dollars) (Editing by Richard Borsuk)
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