HK, Shanghai shares fall tracking weak overseas markets

* BoCom falls after posting flat quarterly profit

* Nine Dragons tumbles on new share sale plan

(Updates to midday)

By Jun Ebias and Claire Zhang

HONG KONG/SHANGHAI, Oct 29 (Reuters) - Shares in Hong Kong
and China eased on Thursday, as weak overseas markets spurred
move profit taking, while Nine Dragons' plan to sell new shares
further dampened investor sentiment toward the mainland firm.

In Shanghai, China's key stock index sank 2.1 percent, with
blue-chip shares soft as more supplies hit the market, while
investors shifted some of their attention to the ChiNext start-up
market due to debut on Friday.

The benchmark Hang Seng Index .HSI eased 2.42 percent or
525.70 points to 21,235.88 at midday. Turnover was HK$47.68
billion ($6.2 billion), versus midday Wednesday's HK$40.00
billion.

"Funds appear to be locking in profit as the month end
approaches," said John Mar, co-head of sales trading, Daiwa
Securities SMBC. "Given that we are near the top of recent
trading ranges, market direction has been taking a lead from
overnight moves in the U.S. markets."

Bank of Communications (3328.HK) (BoCom) shed 5.98 percent,
after reporting a flat quarterly net profit. [ID:nSHA292778]

"There wasn't much of a positive surprise in it's
third-quarter results, so it's down a bit more than the other
banks," said Paul Lee, an analyst at Tai Fook Securities. The
bank will likely post low single-digit growth in net profit for
the whole of 2009, he added.

Citi reiterated its sell' recommendation on BoCom, noting
that the lender has the lowest tier 1 capital ratio among its
peers, which could be a constraint on future loan growth.

Index heavyweight HSBC Holdings (0005.HK) lost 1.73 percent
and Bank of China (3988.HK) was 2.70 percent lower.

The China Enterprise Index of top locally listed mainland
Chinese stocks .HSCE dropped 3.08 percent to 12,436.50.

PetroChina (0857.HK) fell 4.82 percent. The oil producer
posted a 23.5 percent decline in quarterly net profit as a steep
slide in crude oil prices hurt earnings. [ID:nHKF080493]

Other oil firms were also down. CNOOC (0883.HK) fell 3.99
percent, while Sinopec (0386.HK) lost 1.49 percent.

In Shanghai, PetroChina (601857.SS), the most heavily
weighted share in the index, fell 1.57 percent to 13.18 yuan.

Nine Dragons Paper (2689.HK) tumbled 10.84 percent. The
packaging and paperboard maker said it would sell HK$2.87 billion
($370 million) worth of new shares to its controlling
shareholder. [ID:nHKG349726]

Bucking the trend, Geely Automobile (0175.HK) rose 1.74
percent. Ford Motor Co (F.N) named Geely's major shareholder as
preferred bidder for its loss-making Swedish unit Volvo.
[ID:nLS682068]

Zijin Mining (2899.HK) fell 4.56 percent, even after
reporting a 15.1 percent jump in quarterly profit.

Lianhua Supermarket Holdings (0980.HK) lost 3.32 percent,
after reporting a 329.9 million yuan net profit in
January-September, without giving comparative figures.

Wynn Macau (1128.HK) extended its decline and slid 3.62
percent. The stock ended 7.03 percent lower on Wednesday after
its parent, Wynn Resorts (WYNN.O), gave a downbeat outlook.

SHANGHAI DROPS

The Shanghai Composite Index .SSEC ended the morning at
2,967.521 points, with losing Shanghai A shares outnumbering
gainers 754 to 132. Turnover edged up to 62 billion yuan from
Wednesday morning's 60 billion yuan.

China State Construction Engineering Corp (601668.SS),
China's biggest home builder, fell 6.98 percent to 4.80 yuan and
was the most actively traded stock after saying 6 billion shares
emerged from a lock-up and became tradeable on Thursday.

Investors cashed in profits on the shares, which surged when
they listed in Shanghai three months ago, analysts said.

"The fall on overseas markets encouraged selling, and blue
chips' weakness could drag the index another 100 points lower,"
said Li Wenhui, senior analyst at Huatai Securities in Nanjing.

"Investors are also keeping a close eye on ChiNext, to see
its impact on the main board."
ChiNext, a Nasdaq-style second board for start-ups, is due to
begin trade in Shenzhen this Friday with an initial batch of 28
listed companies, and analysts said a strong debut performance
could divert money and attention away from the main board.

Some expected the Shanghai benchmark index may initially move
lower to test support around its 125-day moving average, now at
2,930 points.

Property shares were weak, with China Vanke (000002.SZ)
dropping 3.44 percent to 11.52 yuan, while Jiangxi Copper
(600362.SS) sagged 3.86 percent to 37.88 yuan as Shanghai copper
futures prices fell to one-week low.

Steel shares were soft, with Wuhan Steel (600005.SS) losing
2.30 percent to 7.23 yuan. The U.S. Commerce Department said on
Tuesday it had set preliminary duties on imports of concrete
steel wire strand and steel grating from China to offset
government subsidies. [ID:nLS600052]

But health-related shares were strong after Beijing reported
its first death from H1N1 flu. Shenzhen Neptunus Bioengineering
000078.SZ soared 8.20 percent to 16.62 yuan.

(Editing by Jonathan Hopfner)