Weak July lending data pulls down China, Hong Kong share indexes

Wed Aug 13, 2014 12:44am EDT

* HSI -0.2 pct, H-shares -0.3 pct, CSI300 -0.7 pct

* China banks down after new loan numbers well below forecast

* Gas distributors fall on price hike

* Liquor makers rise as peak season draws near (Updates to midday)

By Grace Li

HONG KONG, Aug 13 (Reuters) - China and Hong Kong shares reversed gains and slipped into the red on Wednesday, after central bank data showed Chinese banks lent far less money than expected in July while money supply growth eased.

Banks in China made 385.2 billion yuan ($62.54 billion) of new yuan loans in July, slowing sharply from 1.08 trillion yuan in June and well below market forecasts of 727.5 billion yuan.

China's total social financing aggregate, a broad measure of liquidity in the economy, was 273.1 billion yuan in July, about one seventh of the 1.97 trillion yuan the month before.

China's main stock index, the Shanghai Composite Index , surrendered a gain of 0.4 percent to end the morning session down 0.6 percent at 2,207.59 points. The CSI300 of the leading Shanghai and Shenzhen A-share listings fell 0.7 percent.

The Hang Seng Index was off 0.2 percent at 24,630.93 points by midday, while the China Enterprises Index of the top Chinese listings in Hong Kong slipped 0.3 percent.

"Many investors have been waiting for July's economic data to decide their investment strategy after the market's recent gains," said Xiao Shijun, analyst at Guodu Securities in Beijing.

"Now that the credit data lagged far behind expectations, that is really a hit at market sentiment," he said.

Chinese banks suffered losses following the data release. Agricultural Bank of China edged down 0.4 percent and Industrial and Commercial Bank of China 0.3 percent.

Smaller lenders Bank of Communications and China Citic Bank both slid 1.4 percent.

The makers of China's fiery liquor baijiu bucked the trend and posted solid gains on Wednesday, on hopes that sales would jump with the Mid-Autumn Festival nearing.

Jiugui Liquor soared the maximum allowed 10 percent. Sector leader Kweichow Moutai added a modest 0.2 percent after an Information Times report on Wednesday said some shops in Guangzhou have raised prices for certain products.

Shares of mainland gas distributors ENN Energy Holdings and China Resources Gas Group sank 3.8 and 1.7 percent, respectively.

China announced on Tuesday it would raise natural gas prices for bulk buyers and non-residential use from Sept. 1 by 0.4 yuan per cubic metre.

Barclays, in a note on Wednesday, said higher prices may weigh on China's city gas distributors as margins soften and volume growth ebbs. (1 US dollar = 6.1597 Chinese yuan) (Additional reporting by Lu Jianxin in SHANGHAI; Editing by Richard Borsuk)