UPDATE 4-Shanghai, Hong Kong shares fall as China to launch new probe into margin trading
* Stock regulator to inspect 46 firms on margin trading-Xinhua
* Says part of routine checks, should not be "over interpreted"
* Could pose risk to broader banking system/economy
* CSI300 -1.0 pct, SSEC -1.2 pct, HSI -1.2 pct (Adds graphic on surge in Shanghai margin trading)
By Kazunori Takada and Sue-Lin Wong
SHANGHAI, Jan 29 (Reuters) - China's stock regulator is launching a fresh probe into brokerages which are lending money to investors to speculate on stocks, amid concerns that the country's share markets are becoming over-leveraged and vulnerable to a crash which could strain the banking system.
The regulator will inspect the stock margin trading business of 46 companies, the official Xinhua news agency said.
Sources had told Reuters on Wednesday that regulators were renewing their investigations into margin trading, which hit record highs this week as more investors pile into the sizzling rally.
In addition, banks have been ordered to tighten lending supervision to avoid loans being funnelled into stock markets. Chinese banks' bad debt ratios are already at five-year highs and a sudden correction in the stock market could exposure them to significant additional risks. Continuación...