* CSI300 -1.1 pct; SSEC -1.3 pct; HSI +1.3 pct
* Tightened regulation hurt sentiment - trader
* Nine companies launch IPOs this week in China
SHANGHAI, Aug 1 (Reuters) - China stocks slumped more than 1 percent on Monday morning as a crackdown by regulators on speculation led investors to dump small caps ahead of a fresh wave of initial public offerings (IPOs).
But Hong Kong shares rose sharply, as Asian shares hit a one-year high after disappointing United States economic growth data reduced expectations of imminent U.S. rate hikes.
China's blue-chip CSI300 index fell 1.1 percent, to 3,167.65 points by lunch break, while the Shanghai Composite Index lost 1.3 percent, to 2,942.24 points.
Small-caps were among the worst casualties, with Shenzhen's start-up board ChiNext tumbling more than 2 percent.
"We have seen an escalation in regulatory oversight," said Wu Kan, head of equity trading at investment firm Shanshan Finance.
"It's good for the market in the long term, but it hurts sentiment in the short term."
China's top securities regulator Liu Shiyu, who took office in February, has started to show its teeth with the launch of a series of tightening measures over the past weeks.
The watchdog has tightened rules over hedge funds, limited shadow banking business of mutual fund houses, and is drafting rules aimed at curbing money flows from banks into the stock market through wealth management products.
In addition, the Shanghai and Shenzhen stock exchanges issued 29 letters of enquires to listed companies over the past week alone, questioning the logic of their restructuring plans or other corporate activities, a move seen as a crackdown on speculative trading.
Traders also attributed Monday's market weakness to a flood of nine IPOs this week, including relatively big share sales by Jiangsu Jiangyin Rural Commercial Bank Co Ltd and Bank of Guiyang Co.
Investors remain pessimistic about China's economy in the second half, even as a private business survey showed on Monday that China's manufacturing activity expanded for the first time in 17 months in July.
But Hong Kong shares followed Asian markets higher.
The Hang Seng index added 1.3 percent, to 22,178.73 points, while the Hong Kong China Enterprises Index gained 2.1 percent, to 9,143.82.
Reporting by Samuel Shen and Pete Sweeney; Editing by Richard Borsuk