Shanghai shares fall most in four weeks on fading stimulus hopes

* Shanghai shares and China blue-chips fall 1.3%

* China keeps key lending benchmark steady for 4th straight month

* Trump says he stopped trade talks, not interested in China chat

HONG KONG, Aug 20 (Reuters) - The Shanghai stock market dropped the most in four weeks on Thursday after the country kept a key interest rate steady and as expectations of further policy support from Beijing dwindled. ** The Shanghai Composite index fell 1.3% to close at 3,363.90, marking its worst day since July 24. ** The blue-chip CSI300 index also fell 1.3%, with its financial sector sub-index down 1.3%, the real estate index down 0.3% and the healthcare sub-index down 0.8%. ** The smaller Shenzhen index fell 1.2% and the start-up board ChiNext Composite index weakened almost 1%. Shanghai’s tech-focused STAR50 lost 2%. ** China kept its benchmark lending rate for corporate and household loans steady, as expected, for the fourth straight month at its August fixing on Thursday. ** The news came after premier Li Keqiang stressed last week that China would not resort to a flood-like stimulus.

** Chinese A-shares were dragged down by expectations that interest rates will not go any lower, said Steven Leung, a Hong Kong-based executive director at UOB Kay Hian.

** “The market is worried about there may not be more much liquidity to come,” he added.

** U.S. President Donald Trump on Tuesday said he postponed trade talks with China, adding that he does not want to talk to China right now. A review of the phase-1 trade deal scheduled for last weekend did not take place. ** Around the region, MSCI’s Asia ex-Japan stock index fell 1.8%, while Japan’s Nikkei index lost 1%. ** At 0701 GMT, the yuan was 0.04% weaker at 6.9218 per U.S. dollar. ** The Shanghai stock index is up 10.3% and the CSI300 has risen 14.2% this year. Shanghai stocks have risen 1.6% this month. ** About 33.56 billion shares were traded on the Shanghai exchange, less than the previous session’s 40.57 billion. (Reporting by Noah Sin; Editing by Amy Caren Daniel)