China stocks fall on policy worry; HK down as Morgan Stanley downgrades
* CSI300 -0.9 pct; SSEC -1.4 pct HSI -0.6 pct
* Investors concerned over possible tightening in margin financing
* Morgan Stanley downgrades China stocks for first time in 7.5 yrs
By Samuel Shen and Kazunori Takada
SHANGHAI, May 7 (Reuters) - China stocks went into the mid-session on Thursday on course for a fall for a third straight day, as fears of fresh moves by regulators to reduce leverage in stock trading dampened risk appetite.
The CSI300 index fell 0.9 percent, to 4,513.67 points at the end of the morning session, while the Shanghai Composite Index lost 1.4 percent, to 4,169.64 points.
Hong Kong stocks followed mainland markets lower, as Morgan Stanley - usually bullish on China - downgraded the MSCI China Index for the first time in 7 1/2 years due to valuation concerns.
Leaks of a set of policy recommendations - including capping the size of margin financing, and limiting the type of stocks investors can buy with borrowed money - started swirling widely on the Internet and in social media late on Wednesday.
China's securities regulator clarified on Thursday morning that these were merely expert suggestions presented during a seminar, not regulators' requirements. But the statement was later deleted from the watchdog's official microblogging account weibo, for unknown reasons. Continuación...