* HSI -1.9 pct, H-shares -1.8 pct, CSI300 +0.4 pct
* HK benchmark down to 3-month low
* HK retailers suffer as protests disrupt Golden Week holiday
* Shiji Info Tech soars 10 pct after Alibaba buys stake (Updates to midday)
By Grace Li
HONG KONG, Sept 29 (Reuters) - Hong Kong shares fell by midday on Monday after pro-democracy supporters clashed with police in the worst unrest in the city since China took back control of the former British colony almost two decades ago.
Chinese markets, in contrast, hovered in positive territory unaffected by the protests in Hong Kong. News reports and photos of the clashes between protesters and police were not easily accessible via the Internet on the mainland, with posts on social media also blocked by censors.
By midday, the Hang Seng Index was down 1.9 percent at 23,218.64 points. The benchmark index had recovered slightly from a three-month low with losses of nearly 600 points.
The China Enterprises Index of the top Chinese listings in Hong Kong fell 1.8 percent.
The CSI300 of the leading Shanghai and Shenzhen A-share listings rose 0.4 percent, while the Shanghai Composite Index also added 0.4 percent to 2,357.42 points.
In Hong Kong, some banks closed branches and ATMs in certain parts of the city, while the central bank said it stood ready to inject liquidity into the banking system "as and when needed".
Riot police advanced on democracy protesters overnight, firing volleys of tear gas after launching a baton-charge, but protesters had gathered again by the morning.
"The Occupy thing in Hong Kong has gone out of control, and a lot of investors, even Hong Kong people, got worried how would that end or would these violent things continue for a while," said Jackson Wong, associate director at United Simsen Securities. The protest movement is known as Occupy Central with Love and Peace.
"At this point (there are) a lot of uncertainties in the market...people don't like the situation right now," added Wong, who also mentioned gains had been expected for Monday following a rally in Wall Street and news about the cross-border trading link on Friday.
Local retailers, which are already grappling with a protracted slowdown in sales, were hardest hit with increasing civil unrest in Hong Kong scaring off Chinese tourists just ahead of China's Golden Week holiday.
Cosmetics chain Sa Sa International skidded 3.5 percent, Chow Tai Fook Jewellery declined 3.1 percent, while Emperor Watch & Jewellery plummeted 7.9 percent.
A sub-index for property stocks in Hong Kong dived 3.3 percent. Shopping mall owner and developer Wharf Holdings slid as much as 6.2 percent, New World Development sank 4.6 percent, and Cheung Kong Holdings shed 3.3 percent.
Financial stocks were not spared either. HSBC Holdings , insurer AIA Group and Hong Kong Exchanges and Clearing fell 1.2 percent, 2.2 percent and 2.7 percent, respectively.
Unaffected by Hong Kong's troubles, the benchmark index in Shanghai climbed to near its 19-month high, with recently outperforming military-related and brokerage stocks leading gains.
Beijing Shiji Information Technology surged the maximum allowed 10 percent after Alibaba Group bought a 15 percent stake in the Chinese hospitality technology provider for 2.81 billion yuan ($457.8 million).
The price divergence between China's onshore and offshore markets narrowed, with the Hang Seng China A-H Premium Index at around 100, meaning shares in companies with dual listings were trading at similar levels in the two markets.
The index has recovered from a more than eight-year low in late July, when H-shares were trading at an 11 percent premium over A-shares.
$1 = 6.1385 Chinese yuan Editing by Jacqueline Wong