(Updates to midday)
* HSI inches up 0.1 pct, but fails at chart resistance
* H-shares down 0.5 pct, CSI300 slumps 2.5 pct, Shanghai sheds 2.1 pct
* China property weak, disappointing housing sales in Sept so far
* Japan-related names weak, hit by anti-Japan sentiment
By Clement Tan
HONG KONG, Sept 17 (Reuters) - Hong Kong shares held at 4-1/2-month highs on Monday, with strength in Chinese oil giant CNOOC Ltd offsetting falls in Chinese property counters, which weakened after news reports pointing to a sharp drop in home sales in Beijing.
The Hang Seng Index closed up 0.1 percent at 20,658.1, the highest since early May, but the market had failed to hold onto early gains despite opening above chart resistance at 20,674.5, the lower end of a gap between May 4 and 7.
The China Enterprises Index of the top Chinese listings in Hong Kong ended down 0.5 percent at 9,780.9.
In the mainland, the CSI300 Index of the top Shanghai and Shenzhen listings shed 2.5 percent, its worst loss since June 4. The Shanghai Composite Index lost 2.1 percent, its worst loss since July 9.
News reports quoting data from the Beijing Municipal Construction Committee showing property sales in the city during the first two weeks of September slipped sharply fed fears that curbs on the sector had hit sales harder than expected in the peak September-October season.
Sentiment was also hurt by the ongoing anti-Japan protests in the mainland, with sharp falls in stock prices of Chinese automakers with close working ties with Japanese firms like of Toyota, Honda and Nissan. Guangzhou Automobile plummetted 6.1 percent in Shanghai and Dongfeng Motor dived 7 percent in Hong Kong.
Strength in some defensive sectors and low trading interest further pointed to risk aversion. Turnover in Hong Kong on Monday declined 24 percent from Friday, while volume in Shanghai dropped 16 percent from Friday to the lowest in seven sessions.
"In this jittery market, everything is driven by sentiment right now," said Hong Hao, chief strategist at Bank of Communictions International Securities.
Hong said investors should hold onto their positions if they had placed their bets two weeks ago before the European Central Bank and the U.S Federal Reserve moved to ease and before Beijing announced fiscal stimulus measures.
"We're still early in the easing cycle," he said.
The news reports on weak home sales put the Chinese property sector into yet another tailspin, and official house price data due out on Tuesday will be keenly watched.
The Shanghai property sub-index lost 3.8 percent. Poly Real Estate slumped 6.7 percent, and has now given up about 50 percent of its rise from Aug 30 lows to Sept 10 highs.
In Hong Kong, China Overseas Land shed 1.8 percent, while China Resources Land slumped 3.4 percent also on reports that it could buy property from its parent company.
HKEx AND HK PROPERTY SECTOR DIVERGE ON QE3 HOPES
Exchange operator Hong Kong Exchange (HKEx) rose in heavy volumes for a third-straight session, jumping 2.5 percent to its highest close since early May. It has now surged 19 percent from a low on Sept 6.
Investors are betting that the third round of quantitative easing announced by the U.S. Federal Reserve last week could boost sagging trading volumes in the Chinese territory.
Chinese oil giant CNOOC Ltd was another top performer on the Hang Seng, rising 3.7 percent as Brent crude rose for the eighth day to near $117 per barrel.
Hong Kong property developers were mostly weaker after moves on Friday by its de facto central bank to curb home loans, to cool the city's property market and discourage it as a destination for cheap money resulting from the U.S. Federal Reserve's latest stimulus plan.
Sun Hung Kai Properties rose 0.9 percent, but Midland Holdings, the territory's largest listed property brokerage, lost 2.3 percent. Henderson Land shed 1.4 percent, while Sino Land slid 2.1 percent.
Additional reporting by Chen Yixin in SHANGHAI and Langi Chiang in BEIJING; Editing by XXX