May 13, 2016 / 4:56 AM / 2 years ago

China stocks head for 4th week of decline; Hong Kong reaches 2-mth low

* CSI300: flat; SSEC: flat; HSI: -1.0 pct

* China index poised to fall for four straight weeks

* Hong Kong Q2 economic growth likely weakest in 4 years

SHANGHAI, May 13 (Reuters) - China stocks were little changed on Friday morning, but the benchmark index is heading towards its fourth week of declines amid increasing doubts over the strength of the country’s economic recovery.

Hong Kong shares dropped to a fresh two-month low, dragged lower by energy and tech shares.

As a bearish week for China stocks approached its end, both the blue-chip CSI300 index and the Shanghai Composite Index stabilized, ending the morning session flat, at 3,088.78 points and 2,837.01 points, respectively.

The Shanghai Composite is down 2.6 percent so far for the week.

Investor confidence had been hit by a People’s Daily article published on Monday, which warned of economic recession if China continues to use rapid credit expansion to stimulate growth.

The story, which also judged that China’s economic trend is “L-shaped”, is widely seen as signalling a shift away from Beijing’s stimulus efforts via credit expansion policies.

This apparent shift was backed by data showing China’s fiscal expenditures rose 4.5 percent in April from a year earlier, slowing sharply from a 20.1 percent jump in March, official data showed on Friday.

Investors will also be watching closely a spate of economic data to be released over the weekend.

Sector performance was mixed on Friday morning. Banking and industrial sectors were slightly up, but transportation and infrastructure shares dipped.

In Hong Kong, the Hang Seng index dropped 1.0 percent, to 19,726.40 points, while the Hong Kong China Enterprises Index lost 1.1 percent, to 8,321.58.

Hong Kong’s economy probably grew at its weakest annual pace in four years in the first quarter, hurt by China’s slowdown, weak retail sales and falling asset prices, according to four economists surveyed by Reuters.

Most sectors in Hong Kong dropped, with energy and tech shares leading the decline.

Samuel Shen and Pete Sweeney; Editing by Shri Navaratnam

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