REFILE-HK, China shares slip after recent steep gains

(Refiles to fix typos in eighth paragraph)

(Updates to midday)

HONG KONG/SHANGHAI, June 5 (Reuters) - Hong Kong and China shares drifted lower on Friday, with investors selling some shares after making recent hefty gains, but energy and metal stocks were helped by firmer commodity prices, propped up by a set of encouraging U.S. economic data.

Shares in Aluminum Corp of China (Chalco) (2600.HK) dropped 1.7 percent in Hong Kong after Rio Tinto (RIO.AX) (RIO.L) scrapped its proposed $19.5 billion tie-up with the Chinese company's parent firm, Chinalco. [ID:nRIO]

However the Shanghai-listed scrip (601600.SS), which is trading at a more than 70 percent premium to the Hong Kong shares, rose 2.2 percent to 12.38 yuan as analysts asserted there will be no fundamental impact on Chalco's operations from the scuttled deal.

"However, the investment sentiment could be negatively affected, in our view, as we understand that in the past the Rio-Chinalco deal has been one of the key positives for sentiment and one of the major concerns for short sellers," Citigroup analysts Catherine Wang and Thomas P. Wrigglesworth said in a mote to investors.

Here are the index moves and top stock moves by midday-

HONG KONG

* The benchmark Hang Seng Index .HSI was down 0.2 percent at 18,462.76 led by a 1.7 percent drop in heavyweight HSBC (0005.HK).

* The guage has piled on 28 percent since the beginning of the year and its constituents are valued at over 16.5 times their estimated earnings in 2009, a big leap from less than 10 times that they commanded in October 2008.

* "We are now starting to get alarmed about valuations," said Garry Evans, strategist with HSBC, commenting on the 16.3 times price earnings valuation in Asian markets, excluding Japan.

"The truth is that if Asian stocks rise much further they will, frankly, be getting into bubble territory. We think markets need to move sideways for a couple of quarters to allow fundamentals to catch up," he said.

* The China Enterprises Index .HSCE of top mainland companies rose 0.5 percent to 10,762.52.

* Turnover dropped to HK$41.5 billion from HK$48.5 billion by midday Thursday.

* Offshore oil specialist CNOOC (0883.HK) was up 4.1 percent as oil prices stayed above $69 per barrel after hitting a seven-month high on Thursday, with U.S. data feeding expectations of an economic recovery that could revive ailing energy demand.

Asia's top oil and gas producer, PetroChina (0857.HK), rose 1.5 percent at HK$9.26.

* Other energy stocks were also buoyant, with Yanzhou Coal (1171.HK) rising 5.7 percent to HK$11.20 after Citigroup raised its rating on the stock to buy from hold on an improved price outlook for coal as steel ouput recovers. The brokerage set a target price of HK$14 on the stock.

SHANGHAI

* The Shanghai Composite Index .SSEC ended the morning down 0.09 percent at 2,764.829 points, retreating from a fresh 10-month intraday high of 2,791.647 hit in early trade.

* The index has risen 5 percent so far this week, heading for its biggest weekly gain in one month.

* Falling Shanghai A shares outnumbered gainers by 504 to 386, while turnover in Shanghai A shares was active at 83.1 billion yuan ($12.2 billion), although down from Thursday morning's heavy 105.9 billion yuan.

* Analysts said abundant market liquidity could boost the index further, but pressure from a planned resumption of mainland initial public offerings as early as next week might weigh on the market and spur profit-taking after the index hit a new high for the year.

* Shipbuilding shares outperformed, with China State Shipbuilding Co (600150.SS) advancing 3.19 percent to 66.08 yuan. The China Association of National Shipbuilding Industry said China would support plans by qualified shipbuilders to list their shares and issue bonds, as part of an aid plan for the shipbuilding industry. [ID:nSHA372192]

* Metal shares were strong, with Zhongjin Gold (600489.SS) racing up its 10 percent daily limit to 46.55 yuan. Property shares were hit by profit-taking, however, with industry leader Vanke (000002.SZ) losing 1.47 percent to 10.70 yuan after rising 11 percent during the previous four sessions.

(Reporting by Parvathy Ullatil in Hong Kong & Claire Zhang in Shanghai; Editing by Edmund Klamann & Ken Wills)