* HSI -1.4 pct, H-shares -1.6 pct, CSI300 -1.0 pct
* Chinese oil majors under pressure after oil prices dive
* Rail sector buck weakness, new govt investment expected
* Lenovo slips but Q2 earnings at midday beat estimates
By Clement Tan
HONG KONG, Nov 8 Hong Kong shares tumbled 1.4 percent to their lowest in a week on Thursday, as investors took profits on recent outperformers and refocused their attention on the prospect of U.S. fiscal woes roiling financial markets.
But market participants said that while there may be blips, the Hong Kong stock market would continue to benefit from fresh money flows on the back of quantitative easing steps from the U.S. Federal Reserve.
"Europe and the fiscal situation in the U.S. are the focus right now but the uptrend for Chinese shares, particularly ones listed in Hong Kong, remains intact," said Alan Lam, Julius Baer's Greater China equity analyst.
"It's still very difficult to look beyond a three- or six-month window at this point, but the next batch of data tomorrow should do more to reassure investors that the slowdown in China is stabilizing," he added.
The Hang Seng Index went into the midday trading break at 21,790.5, its lowest intra-day level since Nov. 1 but is up 18 percent for the year to date.
The China Enterprises Index of the top Chinese listings in Hong Kong fell 1.6 percent. It is up 7 percent so far this year and has outperformed Asia in the last two months after lagging the broader Hong Kong market for most of the year.
On the mainland, the Shanghai Composite Index and the CSI300 Index of the top Shanghai and Shenzhen listings each lost 1 percent. They have not done as well as Hong Kong stocks and are down 5.2 and 3.5 percent in 2012, respectively.
In another measure of warming interest in Chinese equities, capital inflows into China stock exchange-traded funds (ETFs)in October more than tripled September's total, according to an International Liquidity Review report dated Nov. 7.
According to the same report, China stock ETFs saw some $1.7 billion of inflows in October, the healthiest inflows since the beginning of 2011.
Beijing will post a fresh batch of economic data, starting with inflation, urban investment, industrial output and retail sales on Friday and trade on Saturday, with money supply and loan growth expected any time between Nov. 10 and Nov. 15.
Investors are also eyeing the makeup of the new Politburo Standing Committee at the 18th Party Congress meeting that started in Beijing earlier on Thursday for the likely policy approach of China's incoming leaders.
CHINA OIL MAJORS WEAK
On Thursday, shares of Chinese oil majors came under pressure after oil prices dived 4 percent overnight on growing economic headwinds on both sides of the Atlantic coast.
In Hong Kong, Petrochina Co Ltd shed 2.6 percent, CNOOC Ltd fell 1.7 percent, while China Petroleum & Chemical Corp (Sinopec) lost 1.6 percent.
Shipping, heavy machinery, coal and materials-related sectors also saw some of the bigger losses on the day after recent outperformance.
Shares of China Rongsheng Heavy Industries Group, which surged 62 percent in Hong Kong last month, dived 4.2 percent on Thursday.
But the Chinese railway sector bucked broader market weakness after mainland news outlets reported that Beijing could raise its investment in the sector.
China Railway Group rose 2.4 percent in Hong Kong and 1.1 percent in Shanghai. China Railway Construction was up 0.7 percent in Hong Kong and 0.8 percent in Shanghai.
Shares of Lenovo Group Ltd slid 2.2 percent in Hong Kong ahead of second-quarter corporate earnings. At midday, the Chinese PC maker posted a better-than-expected 12.6 percent rise in quarterly net profit, but still its weakest growth in about three years.
Its shares are up almost 28 percent this year and are currently trading at a 9 percent discount to its 12-month forward price-to-book earnings, according to Thomson Reuters StarMine.