October 31, 2016 / 5:11 AM / 2 years ago

Hong Kong stocks touch 2-month lows on US election jitters; China also falls

* SSEC -0.5 pct, CSI300 -0.4 pct, HSI 0.1 pct

* Hong Kong index heavyweight AIA slumps on China policy

* Uncertain over U.S. presidential election rises on FBI’s review

SHANGHAI, Oct 31 (Reuters) - Hong Kong stocks fell to two-month lows before reversing losses on Monday as uncertainty around the U.S. presidential election spiked on news that the FBI is planning to review more emails related to Democratic presidential candidate Hillary Clinton’s private server.

China stocks dropped, weighed by banking shares, as investors continued to be haunted by yuan depreciation fears.

The Hang Seng Index was up 0.1 percent at 22,984.41 points by lunch break, while the Hong Kong China Enterprises Index gained 0.9 percent to 9,597.30.

Clinton had opened a recent lead over her unpredictable Republican rival Donald Trump in national polls, but it had been narrowing even before the email controversy resurfaced.

Traders say a Trump victory risks triggering a sell-off in global markets as he is seen as prone to trade protectionism.

Sentiment was also hurt by a near 6 percent slump in index heavyweight AIA Group.

The world’s third-largest life insurer by market value hit a 3-1/2-month low after China’s card company UnionPay said it would tighten rules over how mainland customers use its debit and credit cards to purchase Hong Kong insurance products.

But the weakness in Hong Kong’s financial shares was offset by a rebound in IT and property stocks .

In China, the blue-chip CSI300 index fell 0.4 percent to 3,326.85, while the Shanghai Composite Index lost 0.5 percent to 3,090.17 as investors awaited official and private factory activity reports on Tuesday.

Fan Gang, a senior Chinese central banker, sought to reassure markets about Beijing’s commitment to exchange rate reform in the wake of a renewed slide in the yuan and worries that authorities will be moving to a more interventionist stance to curb currency volatility.

Financial and transportation shares sagged but property shares rebounded.

Reporting by Samuel Shen and John Ruwitch; Editing by Kim Coghill

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