HK, Shanghai shares at multi-week lows; developers fall

* Weak U.S. market weigh on China, HK shares
* HK developers slump after HKMA says will limit mortgages
(Updates to close)

By Jun Ebias and Claire Zhang
HONG KONG/SHANGHAI, Oct 27 (Reuters) - Shares in China and
Hong Kong closed at multi-week lows on Tuesday, as weak overseas
markets prompted investors to pocket recent gains, while energy
and metals stocks retreated on soft commodity prices.

In Shanghai, China's key stock index sank 2.83 percent, its
biggest one-day loss in five weeks.

Hong Kong's benchmark Hang Seng Index .HSI fell 1.86
percent, or 420.14 points, the worst one-day drop in more than
three weeks, to 22,169.59. Turnover was HK$73.56 billion ($9.5
billion) versus Friday's HK$76 billion.

Hong Kong financial markets were closed on Monday for a
public holiday.

Among property developers, Sino Land (0083.HK: Quote, Profile, Research) fell 5.37
percent, Henderson Land (0012.HK: Quote, Profile, Research) dropped 4.34 percent and Sung
Hung Kai Properties (0016.HK: Quote, Profile, Research) declined 3.35 percent.

The Hong Kong Monetary Authority on Friday said it would
implement measures to slow a surge in luxury property prices
driven by rich buyers from mainland China, including capping
mortgage loan values. [ID:nHKG305705]

"The market is concerned that the Hong Kong government is
likely to implement more policies to prevent home prices from
rising further," said Belle Liang, research head at Core
Pacific-Yamaichi.

The government and developers would meet this week to discuss
Hong Kong's land supply and auction policies, Liang said.
The China Enterprise Index of top locally listed mainland
Chinese companies .HSCE fell 1.28 percent to 13,145.59,led by a
5.49 percent drop in China Shipping Development (1138.HK: Quote, Profile, Research).

China Life (2628.HK: Quote, Profile, Research) ended up 0.53 percent, after gaining
nearly 2 percent earlier in the session on optimism that rising
financial markets would sustain its long-term growth. The world's
top life insurer by market value on Monday reported that
third-quarter earnings more than doubled. [ID:nPEK296325]

Rival Ping An Insurance (2318.HK: Quote, Profile, Research) erased earlier gains to end
down almost 1 percent, ahead of the announcement of its
third-quarter results later in the day.

ANTA Sports (2020.HK: Quote, Profile, Research) fell 5.41 percent. The company said its
major shareholders would sell a total 80 million shares, or 3.2
percent of the company, at HK$10 each as part of their asset
management plan.

Hong Kong Resources Holdings (2882.HK: Quote, Profile, Research), which resumed trading
in the afternoon session, fell 2.23 percent. The company said it
was placing HK$130 million worth of shares.

SHANGHAI DOWN

The Shanghai Composite Index .SSEC closed at 3,021.459
points, after having scored an 11 percent gain for the month as
of Monday's close. Overseas, the Dow Jones Industrial Average
.DJI dropped more than 1 percent.

Losing Shanghai A shares outnumbered gainers by 801 to 144,
while turnover rose to 139 billion yuan ($20.36 billion) from
Monday's 131 billion yuan.

Energy and metals shares were hit hard by weakness in
commodity prices, with China Shenhua Energy (601088.SS: Quote, Profile, Research) losing
4.61 percent to 34.79 yuan, while Jiangxi Copper (600362.SS: Quote, Profile, Research)
dropped 5.67 percent to 39.43 yuan.

"Cautious investors cashed in gains, taking overseas weakness
as a convenient excuse," said Qian Qimin, deputy head of research
at Shenyin and Wanguo Securities in Shanghai.

Qian added that the Chinese market's rally this month,
propelled by a solid economic recovery and a strong improvement
in corporate earnings, remained intact.

The index should be able to find firm support around the
psychologically important 3,000-point level, although it may take
several weeks to climb back to this year's high of 3,478 points,
Qian said.

Technical charts had shown the index was becoming overbought,
with the 14-day Relative Strength Index (RSI) reaching 63 as of
Monday's close. The RSI fell back to 54 at Tuesday's close. A
reading of 70 or above indicates the market is overbought.

Financial shares were soft, with Industrial and Commercial
Bank of China (601398.SS: Quote, Profile, Research), the country's biggest lender, slipping
2.49 percent to 5.09 yuan.

A total of 236 billion ICBC shares worth 1.23 trillion yuan
became tradeable on Tuesday after the expiry of lock-up periods
but analysts said they were mainly in the hands of big
institutions that were unlikely to cut their holdings sharply.

A Chinese media report that an announcement may be imminent
on a long-discussed Walt Disney (DIS.N: Quote, Profile, Research) proposal to build a theme
park in Shanghai lifted shares of companies rumoured as likely
participants in the project.

Shanghai Lujiazui Finance & Trade Zone Development
(600663.SS: Quote, Profile, Research) rose 4.02 percent to 29.50 yuan and Shanghai Jielong
Group Industry (600836.SS: Quote, Profile, Research) climbed by its 10 percent daily limit
to 16.71 yuan.

The official Securities Times, citing a government source,
reported on Tuesday that the Shanghai Disney project had received
approval from policymakers in mid-October and was going through
the final administrative process, with a formal announcement
likely this week.

A Disney representative could not immediately be reached for
comment in Hong Kong.
(Editing by Chris Lewis)