HK shares break 3-day rally as China telcos slip

* China telcos retreat on 3G licence speculation

* Local property stocks climb on improved home sales

* Turnover inches up to HK$54 billion (Updates to close)

By Parvathy Ullatil

HONG KONG, Jan 6 (Reuters) - Hong Kong shares fell 0.4 percent on Tuesday, snapping a three-day, 9 percent rally, as investors locked in gains on Chinese telecom stocks on talk that the much-awaited 3G licences may be issued as early as Wednesday.

But sharp gains in local property counters, due to a significant improvement in December 2008 home sales as compared with the previous month, offset some of the losses on the broad market.

Sun Hung Kai Properties (0016.HK), the territory's biggest developer, gained 4.2 percent, while Henderson Land (0012.HK) rose 4.4 percent to HK$32.2.

The total number of property transactions for December rose 44 percent over November while the transaction revenue shot up more than 90 percent, owing to a slight recovery in investor sentiment, Deutsche Bank said in a report on Tuesday.

"Sentiment among home buyers has improved but it doesn't mean developers' earnings will be boosted substantially," said Patrick Yiu, director with CASH Asset Management.

Yiu said he expects to see the property market stabilise in the second half of 2009.

The Hang Seng Index .HSI ended 53.80 points lower at 15,509.51 after opening 0.3 percent higher.

China Mobile (0941.HK) fell 2.4 percent to HK$83 while smaller rival China Unicom (0762.HK) dropped 5.3 percent to end at HK$10.28.

Both stocks had rallied sharply in the last two sessions on hopes that Chinese telecom companies would be able to offer third generation network services soon, after Beijing approved the long-awaited issuance of 3G licences last week.

China's state council did not say when the licences would be issued to the telecom operators. Market players, led on by media reports from the mainland, are betting on Wednesday, giving investors an opportunity to lock in gains.

"The mobile companies have said they don't have any information about when the licences will be issued plus these stocks have been overbought in the last couple of sessions," said Ben Kwong, chief operating officer with KGI Asia.

Mainboard turnover rose to HK$53.9 billion ($6.9 billion) from HK$49.4 billion on Monday.

The China Enterprises Index of top locally listed mainland Chinese firms .HSCE fell 0.4 percent to 8,644.51.

But resources stocks notched up another day of gains with rising geopolitical tension fuelling a rally in global crude oil prices while domestic prices of some commodities including coal gathered strength.

China Shenhua (1088.HK), the world's most valuable coal miner, gained 2.3 percent while China Coal Energy (1898.HK) rallied 5.8 percent.

Shenzhen Investment (0604.HK) rallied 9.6 percent after Goldman Sachs raised its rating on the stock to buy, arguing its share price has factored in the challenging property market in 2009 and also on expectations that the Shenzhen market will stabilise earlier than most other cities.

China Resources Land (1109.HK), which was downgraded to sell by Goldman analysts on its weakening financial position and higher exposure to markets such as Beijing, Chengdu and Shenzhen, fell 4.8 percent.

(Additional reporting by Donny Kwok; Editing by Jacqueline Wong)