* HSI -0.5 pct, H-shares -0.9 pct, CSI300 +0.1 pct
* China Overseas Grand Oceans tumbles on disappointing H1 results
* Baiyunshan jumps on approval to produce drug in China (Updates to midday)
By Grace Li
HONG KONG, Aug 1 (Reuters) - Hong Kong shares fell on Friday as a month-end swoon on Wall Street hurt sentiment, while China markets eked out slim gains on signs of a pick-up in manufacturing activity on the mainland.
China's factories posted their strongest growth in at least 1-1/2 years in July as new orders surged to multi-month highs, two Purchasing Managers' Index (PMI) readings showed on Friday. The surveys reinforced views the economy is strengthening after a spate of stimulus measures.
By midday, the Hang Seng Index was down 0.5 percent at 24,628.4 and appeared on track for its first daily loss in nine sessions. The China Enterprises Index of the top Chinese listings in Hong Kong fell 0.9 percent. They are up 1.7 percent and 0.3 percent so far this week, respectively.
The CSI300 of the leading Shanghai and Shenzhen A-share listings reversed earlier losses with a 0.1 percent rise, while the Shanghai Composite Index also inched up 0.1 percent to 2,203.08 points.
On the week, the two mainland indexes are now up 4.1 and 3.6 percent, respectively.
Overnight the U.S. S&P500 stock index posted its worst daily fall since April and its first monthly drop since January, as economic data sparked concern the Federal Reserve could raise interest rates sooner than some had expected.
"The PMI figures are within market expectations and have been priced in since the flash PMI came out last month," said Zhang Yanbin, analyst at Zheshang Securities in Shanghai. "The main impact today is from the tumble in the U.S. markets."
Property developers were big index drags in Hong Kong as investors took profits on recent gains.
Cheung Kong Holdings sank 3.8 percent after closing at a record high the previous session. Late on Thursday, the city's second-largest property developer posted a 59 percent rise in first-half net profit to HK$21.35 billion ($2.75 billion).
Shares of smaller mainland developer China Overseas Grand Oceans Group plunged 7.2 percent after a Nomura downgrade from "neutral" to "reduce".
It reported a 31 percent drop in first-half net profit and flagged a gloomy industry outlook due to high inventories and tight credit on Thursday.
Cheung Kong's sister company Hutchison Whampoa added 0.5 percent. The retail-to-telecoms group owned by Asia's richest man Li Ka-shing, posted a 13 percent rise in first-half underlying profit, beating analyst estimates, thanks to its growing European telecom and retail businesses.
Guangzhou Baiyunshan Pharmaceutical Holdings soared 8.2 percent in Shanghai and 6.7 percent in Hong Kong. The company said on its website on Friday it had received production approval for sildenafil citrate tablets after the patent for Viagra expires in China, when generic drugs can be sold locally.
$1 = 7.7498 Hong Kong dollars Editing by Jacqueline Wong