* HSI -0.7 pct, H-shares -2.1 pct, CSI300 -0.5 pct
* H-shares hit by sell-off in dual listed shares
* Concerns over economic fundamentals weigh on markets
By Natalie Thomas
SHANGHAI, April 11 (Reuters) - Hong Kong shares fell on Friday with H-shares down sharply, as new rules allowing mainland and Hong Kong investors to invest in each other's markets led to a sell-off in dual-listed shares previously trading at premium to their mainland counterparts.
Mainland indexes also fell, as Thursday's excitement over the new rules gave way to concerns about fundamentals after two top government officials warned against any major stimulus measures as the economy slows.,.
By midday, the Hang Seng Index was down 0.7 percent at 23,033.68 points. The China Enterprises Index of the top Chinese listings in Hong Kong dropped 2.1 percent, its lowest one-day percentage drop in nine weeks.
The CSI300 index of the largest Shanghai and Shenzhen A-share listings was down 0.5 percent, while the Shanghai Composite Index was down 0.6 percent at 2,121.7 points.
Investors sold Hong Kong-listed H-shares in a bid to narrow the gap between the stock prices in the city and in Shanghai, triggering the biggest loss for the H-share index since Feb. 4.
Ping An led the slide in the index falling 5.8 percent to its lowest in over two weeks, and China Life was down more than 5.1 percent.
Economic concerns also weighed on overall performance, with news that a stimulus was unlikely to come after weak trade data on Thursday.
"I think the market got ahead of itself," said Francis Cheung, CLSA China-HK strategist in Hong Kong.
"Yesterday was a liquidity event but then it goes back to fundamentals, the economy is still slowing and the U.S. market is correcting so there's a resource situation."
On Thursday, China's securities regulator said it would allow mainland investors to trade shares in designated companies listed in Hong Kong, and at the same time let Hong Kong investors buy shares in Shanghai-listed firms.
Mainland investment in Hong Kong would initially involve a quota system which, if the daily limit was invested, would see average daily turnover boosted by 19 percent, according to analysts from BNP Paribas.
On mainland indexes, property shares were particularly hard hit after domestic media reported that a study of the 2013 annual results of 22 major Chinese property firms showed their profit margins dropped sharply last year.
The CSI300 real estate sub-index was down 1.0 percent by lunch, with Yango Group Co Ltd down 5.0 percent, and China Merchants Property Development Co Ltd losing 2.8 percent. Oceanwide Real Estate Group Co Ltd was down 2.8 percent.
One firm still benefitting from the new rules was Hong Kong Exchanges and Clearing Ltd, which gained 10.6 percent by the lunch break.
China Financial Services Holdings Ltd gained 11.1 percent after the firm said it planned raising HK$162.7 million ($20.99 million) for general working capital by selling 300 million shares at HK$0.55 each in a share placement. (Editing by Jacqueline Wong)