China stocks fall after Iran attacks, Hong Kong hits 2-week low

* SSEC -0.6%, CSI300 -0.5%, HSI -0.8%, HSCE -0.9%

* Iran hits U.S.-led military base in Iraq

* Trump says ‘all is well’, to speak later on Wednesday

* Defence and gold shares soar, airlines fall

HONG KONG, Jan 8 (Reuters) - China stocks fell and the Hong Kong benchmark touched a two-week low on Wednesday as Iran’s retaliation against the United States put investors on edge, but losses were limited after U.S. President Donald Trump said “All is well”.

** By the midday break, the Shanghai Composite index fell 0.6% to 3,087.13 and the blue-chip CSI300 index shed 0.5%. ** CSI300’s financial sector sub-index lost 1.2%, the consumer staples sector was flat, the real estate index slid 1.1% and the healthcare sub-index fell 0.5%. ** Chinese H-shares listed in Hong Kong fell 0.9%. ** The Hang Seng Index declined 0.8% to 28,105.50, up slightly from the lowest level since Dec. 24, 2019 hit earlier in the session. ** The smaller Shenzhen index fell 0.1% and the start-up board ChiNext Composite index was weaker by 0.4%. ** Iran launched a missile attack on U.S.-led forces in Iraq in the early hours of Wednesday in retaliation for the U.S. drone strike on an Iranian commander whose killing has raised fears of a wider war in the Middle East. ** Trump said in a tweet late on Tuesday that an assessment of casualties and damage from the strikes was under way and that he would make a statement on Wednesday morning. “All is well!” he said in the Twitter post. ** The heightened tensions lifted the CSI national defense industry index to a near four-month high. Gold miners were among the best performers on the blue-chip CSI300, while airlines fell amid higher oil prices. ** “Initially investors took precautionary, protective measures to lower exposure as a whole. Later on, buyers kicked in and we stabilized quite quickly. China may actually outperform,” said Alex Wong, director at Ample Finance in Hong Kong. ** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.5% and Japan’s Nikkei index was down 1.2%. ** China will not increase its annual low-tariff import quotas for corn, wheat and rice to accommodate stepped-up purchases of farm goods from the United States, local media reported a senior agriculture official as saying on Tuesday. ** The move could make it harder for Beijing to meet import commitments in a Phase 1 trade deal due to be signed next week. ** The largest percentage losers on the Shanghai index were Shandong Huifa Foodstuff Co Ltd, down 10%, followed by China Wafer Level CSP Co Ltd, losing 7.1% and Zhongchang Big Data Corp Ltd, down by 6.4%. (Reporting by Noah Sin; editing by Uttaresh.V)