* SSEC -0.4 pct, CSI300 -0.3 pct, HSI -0.6 pct
* China's congress is expected to emphasize reform over
* China Jan service activity grows the least in 4 months -
SHANGHAI, March 3 China stocks fell on Friday
morning, and were on track to break a three-week rising streak,
as investors awaited an annual parliament meeting that is likely
to send more signals of painful reform than market-friendly
Hong Kong shares were also weak, touching three-week
intraday lows, as a U.S. rate hike looms, and the reality of
rising borrowing costs starts to sink in.
The blue-chip CSI300 index fell 0.3 percent, to
3,425.52 points at the end of the morning session, while the
Shanghai Composite Index lost 0.4 percent, to 3,217.98
CSI300 is on track to register its first weekly decline in a
month, showing the market's blue chip-led rally is losing steam.
Blue-chips have outperformed small-caps on the back of signs
of economic recovery, as well as hopes more fiscal stimulus will
be unveiled at the meeting of China's National People's Congress
(NPC) that starts on Sunday.
However, evidence is building that China's leaders are
expected to telegraph their willingness at NPC to let reforms
overtake policy stimulus as their priority , due to concerns
about financial instability.
China's top planning agency said earlier this week that the
government will not use "strong stimulus" to galvanize the
economy, and the banking regulator said the priority this year
would be to ward off financial risks.
On Friday, the stock market was not helped by a private
survey showing activity in China's services sector expanded at
the slowest pace in four months in February.
"Investor worries are fermenting, and at this juncture,
signs of weakness in one sector would immediately worsen
sentiment of the whole market," Hothot-based Hengtai Securities
said in a strategy report.
Most sectors fell on Friday, with the real estate sector
dropping on news that the city of Hangzhou is slapping more
curbs on property purchases.
Shenzhen's start-up board ChiNext bucked the
trend, up 0.2 percent at midday, despite a nearly 5 percent
slump in bellwether stock Leshi Internet Information
In Hong Kong, the Hang Seng index dropped 0.6
percent, to 23,581.09 points, while the Hong Kong China
Enterprises Index lost 0.8 percent, to 10,161.38.
All main sectors fell, with rate-sensitive property stocks
among the biggest decliners.
(Reporting by Samuel Shen and John Ruwitch; Editing by Richard