May 11, 2017 / 4:48 AM / in a year

China stocks extend losses as regulatory worries persist; Hong Kong up

* SSEC -0.4 pct, CSI300 -0.1 pct, HSI +0.3 pct

* Start-up board index slides to 27-month low

* Regulatory worries still in focus

SHANGHAI, May 11 (Reuters) - China stocks extended losses on Thursday morning, led by Shanghai shares falling to seven-month lows, with sentiment still soured amid tougher financial regulations.

The CSI300 index fell 0.1 percent, to 3,334.29 points at the end of the morning session, while the Shanghai Composite Index lost 0.4 percent, to 3,041.00 points.

The tech-heavy start-up board ChiNext fell 1.4 percent to a fresh 27-month low.

“Compared with other stocks, valuations for listed start-up companies are still much higher, and their growth as a whole also slowed in the first quarter,” said Xiao Shijun, an analyst with Guodu Securities, adding that their growth through mergers and acquisitions was hit hard by tougher financial regulations.

The market’s recent correction was mainly driven by policy and liquidity concerns rather than by concerns over economic fundamentals, Ren Zeping, chief economist with Founder Securities, wrote in a report.

The government’s crackdown on speculation via curbs on lending since April has tightened liquidity, soured risk appetite and hurt demand, Ren noted, adding the pressure from tougher regulations won’t go away anytime soon.

Sector performance was mixed.

Gains were led by bank stocks, while material shares continued to weigh amid a weak commodities market.

Investors were also not cheered by the upcoming Silk Road summit from May 14-15, selling stocks related to the high profile initiative that promotes links between Asia, Africa and Europe underpinned by billions of dollars in infrastructure investment.

In Hong Kong, stocks extended gains to a fresh 21-month high, with sentiment lifted by strength in other Asian markets, and by signs money was continuing to flow in from mainland China.

On Wednesday, Chinese investors used up roughly 30 percent of the daily quota buying Hong Kong stocks under the Shanghai-Hong Kong Stock Connect scheme.

The Hang Seng index added 0.3 percent, to 25,078.83 points.

The Hong Kong China Enterprises Index gained 0.4 percent, to 10,269.90.

Reporting by Luoyan Liu and John Ruwitch; Editing by Jacqueline Wong

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