April 28, 2016 / 5:02 AM / 2 years ago

Commodity shares lead China stocks lower; Hong Kong trims gains

* CSI300 -0.5 pct; SSEC -0.7 pct; HSI +0.5 pct

* Resources shares fall after fresh curbs in commodities trading

* China bank sector only bright spot

* Hong Kong shares retreat after BOJ holds off on stimulus

SHANGHAI, April 28 (Reuters) - China stocks dropped on Thursday morning, led by resource shares, as commodity prices fell in response to fresh regulatory trading curbs, hitting already fragile investor confidence.

Hong Kong shares rose, tracking most Asian markets, as the U.S. Federal Reserve appeared to be in no hurry to raise interest rates, although major indexes gave up some gains by midday after the Bank of Japan held off on expanding monetary stimulus.

China’s blue-chip CSI300 index fell 0.5 percent, to 3,151.66 points by the lunch break, while the Shanghai Composite Index lost 0.7 percent, to 2,933.64 points.

In Hong Kong, both the Hang Seng index and the Hong Kong China Enterprises Index gained 0.5 percent.

“The Fed actually pulled some buyers into the Hong Kong property stocks in the initial part of the session. But then Japan led the pullback ... as the central bank maintained its original interest rate policy when people had expected them to cut,” said Alex Wong, Hong Kong-based director at Ample Finance Group.

He added that “the mainland (market) is a different story,” as the liquidity situation is not looking good and people are starting to worry that the good market performance in the first quarter won’t be repeated in the second.

Reflecting weak market confidence, Shanghai’s trading turnover remained thin on Thursday morning, while outstanding margin loans - money investors borrow to buy stocks - have shrunk for six sessions in a row.

Banking was the only main sector in China that rose on Thursday morning.

An index tracking raw material stocks fell 1.3 percent, as many commodity prices continued to fall after the Dalian Commodity Exchange took further steps to calm volatile futures markets on Wednesday.

Reporting by Samuel Shen and Nathaniel Taplin; Editing by Jacqueline Wong

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