* SSEC -2.1 pct; CSI300 -2.1 pct; HSI -2.8 pct
* Shifting U.S. rate expectations to trigger volatility
* Chinese currency faces depreciation pressure
SHANGHAI, Sept 12 Hong Kong and China stock
markets tumbled over 2 percent on Monday morning, tracking a
sharp retreat in global markets as growing concerns of a
possible U.S. rate hike next week pushed up bond yields and put
renewed depreciation pressure on the Chinese currency.
The Hang Seng index dropped 2.8 percent, to 23,419.37
points by the lunch break, while the Hong Kong China Enterprises
Index lost 3.7 percent, to 9,686.56.
Aided by continuous Chinese money inflows, the Hong Kong
market had gained over 30 percent since its February low, making
a correction natural, some analysts said.
"Shifting US interest rate expectation will trigger
volatility in funding costs, bond prices and the RMB. And
volatility can spill," Hong Hao, chief strategist at BOCOM
International wrote on Monday.
"Long-term investors should pause for better allocation
opportunities ahead in Hong Kong."
After the European central bank last week disappointed the
market by holding its monetary policies unchanged, there are
increasing concerns over possible changes in global liquidity
conditions amid talk the Federal Reserve might be serious about
lifting U.S. interest rates as early as next week.
The prospects of a U.S. rate increase also put pressure on
the Chinese currency. The Chinese central bank sharply weakened
the yuan's official fixing on Monday, although the currency
firmed by midday as state-owned banks sold dollars to keep the
In China, the CSI300 index fell 2.1 percent, to
3,247.97 points. The Shanghai Composite Index also lost
2.1 percent, to 3,015.13 points.
The China market had been moving within a narrow range over
the past weeks, as investors remained on the sidelines with few
signs of economic recovery.
Stocks fell across the board in China and Hong Kong.
(Reporting by Samuel Shen and John Ruwitch; Editing by Richard