UPDATE 4-Money flows to Shanghai as landmark stocks link with Hong Kong opens
* Stock connect is major step in opening China's market
* Northbound quota fully used, only 17 pct used for southbound
* Shares fall on profit-taking, long-term impact seen positive (Updates with market close)
By Kazunori Takada and Saikat Chatterjee
SHANGHAI/HONG KONG, Nov 17 (Reuters) - International buyers snapped up Chinese stocks on Monday at the debut of an exchange link that allows Hong Kong and Shanghai investors to trade shares on each other's bourses, a major step towards opening China's tightly controlled capital markets.
The so-called Stock Connect scheme gives foreign and Chinese retail investors unprecedented access to the two exchanges, which some analysts said could eventually lead to the creation of the world's third largest stock exchange.
Northbound trade - investors with Hong Kong accounts buying mainland shares - far outstripped trade from mainland investors in the opposite direction, with the daily limit for buying Shanghai stocks under the scheme exhausted by mid-afternoon.
But there was no sustained first-day bounce in prices - benchmark mainland and Hong Kong indexes opened more than 1 percent higher but soon sagged to close lower on the day.
The run-up to the launch saw a strong market rally, partly on expectations of an increase in fund flows from the scheme, leaving investors cautious of chasing stocks any higher, said Zheng Weigang, senior trader at Shanghai Securities. Continuación...