* SSEC -0.2 pct, CSI300 -0.2 pct, HSI +0.2 pct
* HK->Shanghai Connect daily quota used 8 pct, Shanghai->HK daily quota used 5 pct
BEIJING/SHANGHAI, Aug 17 (Reuters) - China stocks fell on Wednesday after China on Tuesday approved the launch of a long-anticipated stock trading link to allow stock trading between Hong Kong and Shenzhen, the world's second-busiest, and tech-heavy, exchange.
It also scrapped overall quota limits for an earlier scheme linking Hong Kong to the Shanghai stock exchange, and said there were no overall limits for the new scheme - a restriction that has been a sticking point for big institutional investors on market access issues.
Analysts said the approval of the Hong Kong-Shenzhen connect scheme had been expected, so the market reaction was muted.
"Moreover, the scheme will not introduce a lot of funds to mainland markets judging from the Shanghai-Hong Kong stock link," said Xiao Shijun, analyst at Guodu Securities in Beijing.
Over the longer run, Xiao expected a correction of the valuation gap between Hong Kong and mainland markets.
The CSI300 index, which tracks largest listed companies trading in Shanghai and Shenzhen, fell 0.2 percent, to 3,373.16 points at the end of the morning session, while the Shanghai Composite Index lost 0.2 percent, to 3,104.09 points. The technology heavy ChiNext Composite rose 0.4 percent.
Brokerage stocks listed on mainland rallied in early trade on the approval of the scheme, with CSI SWS Securities index gaining as much as 2 percent at one time on Wednesday morning, but the gain was short-lived and the index fell 0.36 percent as of noon.
China CSI300 stock index futures for August fell 0.2 percent to 3,372, to stand 1.16 points below the current value of the underlying index.
In Hong Kong, the Hang Seng index added 0.2 percent, to 22,963.51 points. The Hong Kong China Enterprises Index lost 0.2 percent, to 9,686.55.
Linus Yip, chief strategist at First Shanghai Securities in Hong Kong said investors focused more on some small cap shares after the announcement failed to have much impact on the key indexes.
"Still four months to go before the show kicks off. Overall, we hold a positive outlook to the Hong Kong market as a whole," said Yip.
He added that he would not expect to see "huge fund flows" as mainland investors would need time to study the Hong Kong market.
($1 = 6.6300 Chinese yuan renminbi)
Reporting By Winni Zhou and Nathaniel Taplin; Editing by Simon Cameron-Moore