August 27, 2013 / 4:53 AM / 4 years ago

Hong Kong, China shares slip on profit-taking, Syria concern

* HSI off 0.3 pct, CSI300 down 0.4 pct, Shanghai -0.2 pct

* Asian markets retreat on Syria worries

* Finance, insurance shares step back after strong Monday

* Trading in PetroChina suspended

By Pete Sweeney

SHANGHAI, Aug 27 (Reuters) - Hong Kong and China shares took a breather on Tuesday after strong performances the previous day, as financial and insurance shares retreated and investors awaited news from Syria.

Many Asian markets were down on Tuesday after the United States signalled possible military action against the Syrian government over a suspected chemical weapons attack.

Chinese markets have been on a gradual recovery trend since a low point in late June during an unexpected credit crunch engineered by the central bank. Analysts say sentiment has been supported by improving mainland economic indicators as promoted in a report released on Monday by China's National Bureau of Statistics.

Also bolstering mainland shares has been unexpected improvement in performance by listed Chinese firms. A report from Citi Research to clients on Tuesday pointed out that more than half of the 76 constituent companies in the MSCI China index beat market expectations.

Earnings for companies in Information technology, utilities and property contained "upward surprises" while other cyclical sectors produced slightly positive surprises, Citi wrote. "Consumer staples is the only sector delivering negative surprises so far."

The Hang Seng Index in Hong Kong was down 0.3 percent in the morning session at 21,938.71, dragged by the China Enterprises sub-index, which ended the morning down 0.45 percent.

Mainland markets also mostly flat, with the CSI300 Index which tracks the largest firms listed in Shanghai and Shenzhen, down 0.38 percent at midday, and the Shanghai Composite Index off at 0.19 percent.

Declines for finance, insurance and manufacturing shares were partly offset by continuing moves into firms expected to benefit from the recently-approved Shanghai Free Trade Zone.

STAND-OUT STOCKS

Shares in Shanghai Fosun Pharmaceutical (Group) Co Ltd rose 1.22 percent to HK$13.38 ($1.73) in Hong Kong after the company said first-half net profit jumped 50 percent to 1.1 billion yuan.

China Southern Airlines Co Ltd , the country's largest carrier by fleet size, dropped 1.7 percent to two-week lows in Hong Kong after the company said its first-half net profit fell 19 percent.

Chinese developer Evergrande Real Estate Group Ltd jumped 3.9 percent after the company announced a 10 percent rise in first-half profit.

Shares in China Merchants Bank fell on Tuesday in both Hong Kong and Shanghai as the bank attempts to tap both markets for funds to top up its capital reserves to mandated levels. In Shanghai, the stock was down 1.3 percent at midday.

PETROCHINA'S TRADING SUSPENSION

Trading in shares of China's dominant energy producer, PetroChina Co Ltd , and those of its related unit Kunlun Energy Co Ltd, were suspended on Tuesday, according to a filing on the Hong Kong stock exchange.

A spokesman for PetroChina said it will issue a statement later Tuesday.

Chinese dairy company Liaoning Huishan Dairy Group plans to seek approval from the Hong Kong stock exchange on Thursday for an up to $1 billion initial public offering, IFR reported on Tuesday, citing sources familiar with the deal.

Huishan Dairy, as the largest producer of dairy products in northeast China is known, could start pre-marketing the deal on Monday if it gets the go-ahead from the exchange for the IPO, added IFR, a Thomson Reuters publication.

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