* SSEC -0.6 pct, CSI300 -0.8 pct, HSI -0.2 pct
* Start-ups sold off as investors chase solid fundamentals
* Shares of Sunac China tumble on media reports
SHANGHAI, July 18 (Reuters) - China stocks extended losses on Tuesday morning, as an intense sell-off in small-caps in the previous session dampened investor confidence despite strong second-quarter economic growth.
The CSI300 index fell 0.8 percent, to 3,632.99 points at the end of the morning session, while the Shanghai Composite Index lost 0.6 percent, to 3,156.76 points.
In Hong Kong, the Hang Seng index dropped 0.2 percent, to 26,427.27 points while the Hong Kong China Enterprises Index lost 0.5 percent, to 10,728.90 points.
Sunac China Holdings shares plunged as much as 13.5 percent in early morning trade, after media reports said Chinese banks are reviewing the property group's financial risk.
Wanda Hotel Development, a listed arm owned by the founder of Dalian Wanda Wang Jianlin, dropped nearly 5 percent after Reuters quoted sources as saying China has told banks to stop providing funding for several of the group's overseas deals.
On mainland exchanges in the morning, 16 stocks - most of them small-caps - plunged by the 10 percent trading limit.
The tech-heavy start-up board ChiNext slid 0.8 percent. On Monday, it tumbled 5.1 percent to its lowest since January 2015.
"The slump in major indexes on Monday was mainly driven by sharp drops in start-up shares, as they forecast continued falls in profit growth, with heavyweight start-ups leading the profit decline," Haitong Securities said in a report. On Monday, China reported its economy grew an annual 6.9 percent in the second quarter, defying expectations for a slight loss of momentum. The growth data helped the Shanghai SE 50 Index, dubbed China's "nifty 50", hit a two-year high on Monday, helped by the growth data.
The root cause for the divided performances in the SE 50 and the start-up index, was investors' preference for solid fundamentals in a range-bound market, Haitong Securities said.
Analysts also expect MSCI's decision to include China shares into its key index to further reinforce investors' focus on fundamentals rather than other speculative factors.
Global fund managers are ramping up their presence in China, aiming to be well ahead of next June's inclusion of mainland-listed stocks into MSCI's benchmark index that is set to boost investment into the economy's $8 trillion equity market.
Most sectors lost ground in the morning, led by banking and healthcare stocks.
Real estate sector gained 0.9 percent, despite data showing China's property market slowed in June as top-tier cities cool.
Trading in shares of Wanda Film, a mainland listed arm of Dalian Wanda, remains suspended pending a major deal.
Reporting by Luoyan Liu and John Ruwitch; Editing by Richard Borsuk