China banks tank on fears of US mortgage lender fallout

HONG KONG, July 15 (Reuters) - Shares in top Chinese lenders tanked on Tuesday, with the nation's biggest bank ICBC (1398.HK) falling over 5 percent, as investors fretted over their likely exposure to the beleaguered U.S mortgage lenders.

Shares in ICBC and Bank of China (3988.HK) fell the most in a month after other banks in the region were seen to be invested in troubled Fredie Mac (FRE.N) and Fannie Mae FNMN>. Other Asian financial stocks also headed south on Tuesday.

But analysts said Chinese banks were only invested in the safer option of agency bonds issued by the U.S. mortgage lenders and did not have any equity exposure.

"Shame on institutional investors who can not differentiate between bonds and equity. It is really unjustified to say that Chinese banks will be badly impacted by this latest crises. This is nothing like the subprime mortgage crisis," said Samuel Chen, an analyst with JP Morgan.

Chinese banking stocks were hammered last year after they revealed multi-billion dollar exposures to the troubled U.s subprime market.

(Reporting by Parvathy Ullatil; Editing by Anne Marie Roantree)