* Hang Seng down 0.2 pct, closes below 100-day moving avg
* HSBC down 1.4 pct, outweighing oil producer rebound
* Shanghai Comp off 0.3 percent, stays below 125-day MA (Updates to close)
By Vikram Subhedar and Clement Tan
HONG KONG, May 11(Reuters) - China shares edged lower on Wednesday as high inflation and tighter liquidity kept investors cautious, while a slide in HSBC pulled the Hong Kong's broader market lower and may keep the benchmark below its 100-day moving average in the near term.
China's higher-than-forecast inflation in April and expectations the central bank will have to continue to take steps to mop up funds from the financial system, analysts see few catalysts for a sustained rally in the markets.
Hong Kong's Hang Seng ended the day down 0.2 percent as a 1.4 percent slide in shares of index heavyweight HSBC more than offset the rebound in the oil plays. CNOOC closed up 1.3 percent.
The benchmark index struggled to stay above its 100-day moving average, currently at 23,435.5 which is now seen as a near-term resistance.
"With CPI coming in higher than expected again today, I think that inflation concerns will continue to plague risk appetite," said a head trader at Hong Kong-based broker.
A weak mainland market that saw the Shanghai Composite shrug off early gains to end down 0.3 percent on the day also weighed.
"Funds are not willing to invest in a market bereft of any direction at this point," said Zhang Qi, an analyst with Haitong Securities in Shanghai. "This is neither a bear nor a bull market. It's a monkey market, jumping up and down."
HSBC Holdings fell 1.4 percent after the bank said it was eyeing cost savings of $2.5 billion-$3.5 billion and is mulling the sale of its U.S. credit card business, according to a statement.[ID:nH9E7ET02G]
In a bearish sign, volume in the counter, which commands a 15 percent weighting on Hong Kong's benchmark Hang Seng index, picked up as losses deepened. Traders expect further weakness after the shares go ex-dividend next week putting a lid on gains for the broader market.
Bucking the overall weak trend, another European company, Esprit Holdings , bounced 2.6 percent from its lowest level in more than 2-1/2 years.
Traders speculated that the beaten-down counter could see a revival of buying interest on news that other upscale retailers including handbag maker Coach Inc were planning to list in Hong Kong reflecting the growing importance of China's luxury market. [ID:nN10292783]
China stocks shrugged off midday gains to finish lower on Wednesday after government data pointed to persistently high inflation with analysts forecasting inflation pressures easing only in the latter half of the year.
The benchmark Shanghai Composite finished at 2,884.4, about 10 points below its 125-day moving average which it tested during the short-lived bounce earlier in the day.
China's inflation eased in April to 5.3 percent, though was higher than forecast, while industrial output and retail sales slowed more than expected.[ID:nL3E7GB0H2]
The upward price trend appeared to have been curbed, though China was still facing relatively big inflation pressure, said Sheng Laiyun, a spokesman of the National Bureau of Statistics.
"Therefore, we must not underestimate the situation and keep making it the priority to control price rises."
A-share turnover on the Shanghai bourse increased from Tuesday low levels but remained under its 20-day average for the thirteenth straight session, barely hitting RMB 10.6 billion.
Financial stocks weighed the most on the benchmark, with Industrial and Commercial Bank of China Ltd (ICBC) the biggest weight, losing 0.7 percent on the day.
Auto stocks were also broadly weaker with SAIC Motor , down 2.6 percent, after the outlook for car sales in China dimmed after two years of rapid expansion partly driven by government incentives. [ID:nL3E7FS23W]
Editing by Kevin Plumberg