June 18 (Reuters) - Hong Kong stocks ended Thursday lower, with investors' risk appetites subdued by a possible Greek default and increasing volatility in the mainland's equity market.
But the Hong Kong exchange seemed to shrug off the midday veto by the city's legislature of a China-vetted electoral reform package, and the U.S. Federal Reserve's latest statement that the U.S. economy is likely strong enough to handle a rate hike this year. [
The Hang Seng index fell 0.2 percent, to 26,694.66, while the China Enterprises Index lost 1.1 percent, to 13,263.37 points.
Alex Kwok, strategist at China Investment Securities (HK), said that both the veto, and an anticipated U.S. rate increase, have been "fully priced in", while investors are more concerned about the Greek debt crisis, and a sharp correction in Chinese stocks.
"The veto had been fully expected. Over the long term, it could harm Hong Kong's economy, but I don't see an immediate impact," Kwok said.
He added that the impact from a U.S. rate hike could also be limited, as the tightening progress will likely be gradual.
"The biggest concern now is the Greek debt crisis. Repercussion of a possible default would hit the Hong Kong market."
The market was also overshadowed by an increasingly volatile China market. On Thursday, mainland stocks slumped over 3 percent amid a wave of new IPOs.
Most Hong Kong-listed financial shares fell, with Chinese lenders taking the lead. (Reporting by Samuel Shen and Pete Sweeney; Editing by Richard Borsuk)