* HSI -1.8 pct, below 23,000 support; H-shares -2.4 pct at
7-week low, CSI300 -1.5 pct
* Chinese financial and cyclical sectors fall after services
* Petro China drops to six-month low
* Baotou Steel Rare-Earth rises after acquiring nine mining
By Yimou Lee
HONG KONG, Jan 3 Hong Kong and Shanghai shares
broke below key technical support levels on Friday, dragging
down by Chinese financial and energy sectors, after another
government survey showed signs the world's second-largest
economy was losing momentum.
Analysts said weakness in global markets, sparked by a bout
of risk aversion, further dampened sentiment as investors
remained concerned about slower economic growth in China.
Growth in China's services sector fell to a four-month low
in December as business expectations dropped, a survey showed,
adding to evidence that China's economy lost steam into the
close of 2013.
By midday, the Hang Seng Index was down 1.8 percent
at a seven-day low of 22,930.05 points, below support at 23,000.
The China Enterprises Index of the top Chinese
listings in Hong Kong fell 2.4 percent to its lowest since
On the week, they are now down 1.3 and 2.6 percent,
In mainland China markets, the CSI300 dropped 1.5
percent, while the Shanghai Composite Index was down 1.4
percent and fell below the 2,100 support level to 2,080.59
points. They have fallen 0.7 and 1 percent so far this week.
"Both service and manufacturing PMI are indicating that
China's economy is not doing particularly well and still lacking
any direction," said Jackson Wong, Tanrich Securities'
vice-president for equity sales in Hong Kong.
"A lot of investors are overly worried about China's economy
health and debt problems," Wong said, adding that most investors
would wait on the sidelines and the Hong Kong market may test
the 27,500 support level in the short-term.
Leading losses were Chinese financial and cyclical stocks.
Ping An Insurance was down 2.4 pct in Shanghai while
China Life declined 2.7 percent.
In Hong Kong, Petro China dropped 2.8 percent to
levels not seen since August, while China Shenhua Energy
tumbled another 4.4 percent after falling
2.3 percent a day earlier.
Property counters were also down, with Green Town China
falling 4.1 percent and China Overseas Land
dropping 2.7 percent. Both fell to their lowest in about six
Chinese rare earth producers rose after the Economic
Information Daily reported on Friday that China's State Council
has approved a plan to set up "large rare earth groups."
Shares in Inner Mongolia Baotou Steel Rare-Earth Hi-Tech
jumped 3.1 percent after the country's biggest
producer of rare earths said it has acquired nine regional
mining companies as part of the government masterplan to
consolidate the sector.
Embattled China Rongsheng Heavy Industries Group Holdings
Ltd surged 6.5 percent to its highest in 7 months,
after Hong Kong's Apple Daily reported on Friday a controlling
share holder of Shunfeng Photovoltaic International Limited
was behind the HK$1 billion convertible bonds the
shipbuilder issued in late December.