China shares fall as Sino-U.S. tensions weigh on GDP beat

* SSEC -1.4%, CSI300 -1.6%, HSI -1.2%

* Q2 GDP expands 3.2% y/y, beating expectation

* Demand at home and abroad remains weak

SHANGHAI, July 16(Reuters) - China and Hong Kong shares fell on Thursday, as worries about a possible decoupling of the Sino-U.S. economies deepened despite a better-than-expected economic growth in the second quarter in the Asian country.

** At the midday break, the Shanghai Composite index was down 1.41% at 3,314.03 points. ** China’s blue-chip CSI300 index was down 1.59%, with its financial sector sub-index lower by 0.3%, the consumer staples sector was down 4.42%, the real estate index up 0.77% and the healthcare sub-index down 3.34%. ** Chinese H-shares listed in Hong Kong fell 1.51% to 10,234.09, while the Hang Seng Index was down 1.17% at 25,183.08. ** The smaller Shenzhen index was down 1.31% and the start-up board ChiNext Composite index was weaker by 1.73%. ** A-share market is losing steam after surging too rapidly in the past a few weeks, said Zhang Yanbing, an analyst with Zheshang Securities. It needs a stronger stimulus to offset woes of Sino-U.S. tensions and trigger another round of bullishness, he added.

** China’s economy grew 3.2% in the second-quarter after a deep slump at the start of the year, data showed on Thursday, faster than the 2.5% forecast by analysts in a Reuters poll.

** The recovery is still uneven as data showed China’s industrial output beat expectations in June, but retail sales unexpectedly fell again, suggesting consumer demand remains weak.

** The United States would impose visa restrictions on Chinese firms like Huawei Technologies Co Ltd, Secretary of State Mike Pompeo said Wednesday. ** Beijing warned of retaliatory sactions and summoned the U.S. ambassador to protest at the Hong Kong Autonomy Act passed by the U.S. Congress and signed by President Donald Trump.

** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 1.20% while Japan’s Nikkei index was down 0.68%. ** The yuan was quoted at 6.9962 per U.S. dollar, 0.11% weaker than the previous close of 6.9885.

** Shares in semiconductor Manufacturing International Corp (SMIC), China’s biggest chipmaker, more than tripled on Thursday on their Shanghai market debut. (Reporting by Zhang Yan, and Andrew Galbraith in Shanghai; Editing by Shailesh Kuber)