HK, China shares lower in light turnover

* HK, China shares down in light turnover

* Chinese coal and property stocks slip on tax news

* HK property stocks soar on demand recovery hopes

(Updates to close)

By Parvathy Ullatil & Claire Zhang

HONG KONG, May 26 (Reuters) - Hong Kong and China stocks retreated on Tuesday in light turnover as heightened political risks in the region and lower oil prices weighed.

The strong run-ups in both markets in recent weeks, with the Hang Seng Index jumping more than 50 percent since early March and the Shanghai Composite Index rising by nearly a quarter in the same period, have made investors cautious about valuations, said analysts.

"Money is not flowing into the market as eagerly as it was two weeks ago and that is partly because neither Hong Kong nor China are inexpensive places to buy shares anymore," said Linus Yip, strategist with First Shanghai Securities.

"The magnitude of the impending correction very much hinges on news from the U.S. and China," he said.

Analysts also blamed this week's public holidays - Thursday in Hong Kong and Thursday and Friday in China - for the sluggish investor participation.

Growing fears that North Korea may fire another short-range missile weighed on other equity markets including Japan and South Korea, and sent crude oil below $61 per barrel.

Offshore oil specialist CNOOC (0883.HK) fell 3.3 percent in Hong Kong after a strong run-up last week on oil's $5 per barrel advance.

HK PROPERTY STOCKS EXTEND RALLY

Hong Kong-based property developers advanced to nine-month highs with the prevailing low-interest-rate environment seen driving up demand for real estate.

In recent days, top brokers including Morgan Stanley, Bank of America-Merrill Lynch and JP Morgan have taken a favourable view of the sector, raising price forecasts amid expectations that demand will recover further in the second half of 2009.

Sino Land (0083.HK) finished at a nine-month high, climbing 8.7 percent to HK$13.94, while property conglomerate New World Development (0017.HK) added 5.2 percent.