| HONG KONG
HONG KONG Chinese shares slipped on Thursday, flattening gains in Hong Kong, as alcohol producers came under renewed pressure over contamination fears.
Investors, however, continued to buy into Chinese infrastructure-related and financial sectors, a day after comments from the new Communist Party chief setting the economic agenda for 2013 lifted the A-share market off four-year lows.
The Hang Seng Index .HSI was flat at midday after opening at its highest intra-day level since August last year. The China Enterprises Index .HSCE of the top Chinese listings in Hong Kong crept up 0.1 percent.
In the mainland, the Shanghai Composite Index .SSEC and CSI300 .CSI300 of the top Shanghai and Shenzhen listings each slipped 0.3 percent from their respective highest since November 14, set on Wednesday.
China's top premium white spirit maker, Kweichow Moutai (600519.SS) dived 3.9 percent in Shanghai, dragging it into negative territory for the year.
Up almost 30 percent at the end of October, Moutai shares are now down 2.2 percent on the year after three straight annual gains. This compares to a 6.2 percent decline for the CSI300.
Traders cited talk that independent tests on Moutai products bought in Hong Kong could show further evidence of excessive levels of plasticiser, an issue that has plagued the sector since last month.
"If previous scares with Mengniu Dairy is any indication, it will be a while before enthusiasm for these alcohol producers return," said Edward Huang, an equity strategist with Haitong International Securities, referring to a contamination case involving the top milk producer.
Although shares of Mengniu (2319.HK) is up 11 percent this year and set for their first gain in three years, confidence has been fragile since samples of its milk powder products in the mainland tested positive for melamine in late 2008.
In Hong Kong, HSBC Holdings (0005.HK)(HSBA.L) slipped 0.4 percent after Reuters reported that Europe's largest bank may pay a $1.8 billion fine to U.S. regulators as part of a settlement over money laundering lapses.
Asian insurance giant AIA Group (1299.HK) shed 0.8 percent to HK$29.95, within the HK$29.84-HK$30.20 range that Malaysia's state investor Khazanah Nasional Bhd's KHAZA.UL priced its $360 million offering of AIA shares.
Khazanah's selldown comes ahead of the expiration of a lockup on AIA shares for American International Group (AIG.N) on Thursday, when the U.S. insurer will be free to sell a stake worth $6.4 billion at current market prices.
CHINA POLICY PLAYS STILL STRONG
Smaller Chinese banks extended Wednesday's gains after the mainland's insurance regulator abolished investment limits on the country's banks for insurance firms late on Tuesday.
Chinese insurers were previously prevented from investing in more than two banks if their ownership of individual banks exceeded 5 percent, a rule that had been in place since 2006.
China Merchants Bank (3968.HK)(600036.SS) rose 2.1 percent in Hong Kong and 0.4 percent in Shanghai, while Beijing Bank (601169.SS) jumped 3.2 percent in Shanghai to a five-month high and was the top boost to the CSI300.
Shares of Chinese insurers were marginally weaker on Thursday after strong gains on Wednesday. China Life Insurance (2628.HK)(601628.SS) slipped 0.2 percent in Hong Kong and 1.2 percent in Shanghai.
Chinese property counters were among the outperformers in Hong Kong and mainland markets, extending their strong gains on the year.
China Vanke (000002.SZ) rose 1.4 percent in Shenzhen, while China Resources Land (1109.HK) jumped 2.7 percent in Hong Kong, stretching its gains on the year to more than 70 percent.
In comments published late on Tuesday and ahead of the party's central economic planning meeting later this month, Xi Jinping listed tax reform, urbanization and a bigger price-setting role for the market as key objectives.
"Investors are aligning themselves along Beijing policy lines more aggressively now after Xi Jinping's comments, but we still lack details on the exact implementation," strategist Huang said.
(Additional reporting by Vikram Subhedar; Editing by Sanjeev Miglani)