China, Hong Kong stocks fall as ZTE plunge unnerves investors

* SSEC -0.8 pct, CSI300 -0.7 pct, HSI -0.6 pct

* HK->Shanghai Connect daily quota used -0.2 pct

* FTSE China A50 -0.6 pct

SHANGHAI, June 13 (Reuters) - China and Hong Kong stocks slid on Wednesday, as a slump in shares of telecommunications giant ZTE Corp sent shivers through the market, and as investors looked to the Federal Reserve policy decision later in the day. ** The CSI300 index fell 0.7 percent, to 3,798.70 points at the end of the morning session, while the Shanghai Composite Index lost 0.8 percent, to 3,056.69 points. ** The Hang Seng index dropped 0.6 percent, to 30,910.60 points, while the Hong Kong China Enterprises Index lost 1.0 percent, to 12,090.43. ** Telecoms firms led the decline on the mainland, with an index tracking major firm in the industry falling by 2.2 percent. ** Chinese telecommunications giant ZTE Corp had about $3 billion wiped off its market value as it resumed trade on Wednesday, after agreeing to pay up to $1.4 billion in penalties to the U.S. government. ** Some fund managers holding stakes in the tech giant have cut their valuations for its shares by as much as 36 percent. ** Adding to pressure, the firm along with four others whose shares have been suspended from trading, were dropped by the U.S. index maker MSCI just ahead of A-share inclusion. ** “We expect the reasonable price for ZTE’s A-shares to be 20.34 yuan, as the event is expected to reduce the firm’s future profits by about 50.3 billion yuan,” China’s domestic brokerage CITIC Securities wrote in a report. ** The Fed is widely expected to raise interest rates for the second time this year after a move in March, but the bigger question for investors is the outlook for future monetary tightening amid an ongoing economic expansion. ** Trade frictions between the U.S. and China are also back on the radar ahead of Friday, by when Washington has said it will release a list of some $50 billion worth of Chinese goods that will be subject to a 25 percent tariff. ** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.48 percent while Japan’s Nikkei index was up 0.44 percent. ** The yuan was quoted at 6.4052 per U.S. dollar, 0.02 percent weaker than the previous close of 6.404. ** The largest percentage gainers in the main Shanghai Composite index were BanBao Co Ltd up 10.02 percent, followed by Sichuan Tianyi Science & Technology Co Ltd gaining 10.01 percent and Ningbo Haitian Precision Machinery Co Ltd up by 9.97 percent. ** The largest percentage losses in the Shanghai index were Henan Rebecca Hair Products Co Ltd down 10.06 percent, followed by Citic Guoan Wine Co Ltd losing 9.97 percent and Shandong Hiking International Co Ltd down by 9.97 percent. ** The top gainers among H-shares were ZhongAn Online P & C Insurance Co Ltd up 3.07 percent, followed by Shenzhou International Group Holdings Ltd gaining 1.67 percent and Guangdong Investment Ltd up by 1.34 percent. ** The three biggest H-shares percentage decliners were Guangzhou Automobile Group Co Ltd which has fallen 3.31 percent, PetroChina Co Ltd which has lost 2.7 percent and CSPC Pharmaceutical Group Ltd down by 2.3 percent. ** About 6.49 billion shares have traded so far on the Shanghai exchange, roughly 49.4 percent of the market’s 30-day moving average of 13.16 billion shares a day. The volume traded was 11.33 billion as of the last full trading day. ** As of 04:04 GMT, China’s A-shares were trading at a premium of 18.19 percent over the Hong Kong-listed H-shares. ** The Shanghai stock index is below its 50-day moving average and below its 200-day moving average. ** The price-to-earnings ratio of the Shanghai index was 13.22 as of the last full trading day while the dividend yield was 2.5 percent. ** So far this week, the market capitalisation of the Shanghai stock index has risen by 0.51 percent to 31.90 trillion yuan.

Reporting by Luoyan Liu and John Ruwitch; Editing by Sunil Nair