(Updates to midday)
* HSI down 0.7 pct, Shanghai Comp slips 0.8 pct
* Chinese banks weak ahead of "Big Four" earnings
* HK & China Gas jumps after results beat expectations
By Clement Tan
HONG KONG, March 20 (Reuters) - Hong Kong and China shares retreated in weak Tuesday trade, underperforming Asian peers, as investors took money off the table with the ongoing corporate earnings season failing to meet expectations.
According to Thomson Reuters StarMine, of the 43 percent of Chinese companies that have reported 2011 earnings, nearly 70 percent have missed forecasts, with material names producing the biggest disappointment.
The Shanghai Composite Index lost 0.8 percent. The China Enterprises Index of the top mainland listings in Hong Kong shed 1 percent, while the broader Hang Seng Index slipped 0.7 percent.
Turnover at midday was weak in both markets, nearing a monthly low in Hong Kong, seen partly crimped due to a Japan market holiday.
"There're no fresh positive catalysts; we are in a downward spiral today. I'm just trying to cut my losses," said Alex Wong, Ample Finance's director of asset management.
The Hang Seng Index and the China Enterprises Index rose 17.6 and 19 percent respectively in the first two months of this year, as investors chased a rally in growth-sensitive names that led a 20 percent slump last year on both benchmarks.
But the Hang Seng Index is down 3.3 and the China Enterprise Index down 7.6 percent in March, with the rally unravelling as fundamentals come back into view with corporate earnings kicking into gear.
Investors however cheered shares of companies that posted positive earnings, suggesting those with strong fundamentals could lead any further rally beyond the current results season stretching until the end of March.
Hong Kong & China Gas Co Ltd jumped 3.2 percent in midday volume that has exceeded its 30-day average after posting a forecast-beating 10 percent increase in 2011 net profit from a year ago, while also announcing a special dividend.
The Shanghai materials and industrial sub-indices were among the bigger underperformers, each down 0.8 percent. Sany Heavy Industry Co Ltd, which is expected to post 2011 earnings on March 26, slipped 1.1 percent.
Sun Hung Kai Properties was among the top drags on the Hang Seng Index after one of its senior executives was arrested by Hong Kong's anti-graft body over suspected bribery.
Belle International, a China-focused footwear retailer, slipped 1.8 percent ahead of its corporate earnings later on Tuesday. It has lost 7.6 percent since hitting a 3-1/2 month high last Thursday.
Chinese financials were broadly weaker in Hong Kong and mainland Chinese markets ahead of key earnings later this week.
Agricultural Bank of China (AgBank) , which will post earnings on Thursday, first among the so-called "Big Four" Chinese banks, was down 0.6 percent in Hong Kong and 0.8 percent in Shanghai. (Additional reporting by Vikram Subhedar; Editing by Jonathan Hopfner)