(Updates to midday)
* HSI down 1.1 pct, Shanghai Comp up 1.4 pct
* HSI holding above chart support, off day’s lows
* HK weak ahead of 4-day weekend and China data next week
* Non-bank financials strong in mainland on Wen comments
By Clement Tan
HONG KONG, April 5 (Reuters) - Hong Kong shares declined on Thursday, dragged by weakness in the Chinese financial and consumer sectors, as investors took some profits on the final trading day before a four-day holiday weekend and ahead of U.S. jobs data on Friday.
Mainland Chinese markets resumed trading stronger after a three-day holiday, bolstered by non-banking financials after Premier Wen Jiabao said the monopoly formed by the country’s big banks needs to be broken to get money flowing to cash-starved private firms.
The Shanghai Composite Index gained 1.4 percent at midday in the highest midday A-share turnover since March 21, with China Life Insurance and Citic Securities its top two boosts.
The China Enterprises Index of the top mainland listings in Hong Kong slipped 1.2 percent. The Hang Seng Index lost 1.1 percent, holding above 20,522, the low on March 7 that has served as chart support in recent sessions.
“It’s good that we have bounced off lows for the day. People are getting some jitters about the U.S. jobs report on Good Friday and especially China data next week after the confusing PMI data last weekend,” said Jackson Wong, Tanrich Securities’ vice-president for equity sales.
Hong Kong markets will resume trading next Tuesday, with Beijing expected to report March inflation data on Monday and trade figures on Tuesday. March money supply and loan growth could be announced any time starting Tuesday, while first quarter gross domestic product as well as March investment output and retail sales be posted on Friday, April 13.
Data released this past Sunday showed China’s big factories were surprisingly busy in March as a stream of new orders lifted activity to an 11-month high, but credit-constrained smaller manufacturers struggled, suggesting that the economy is still losing steam.
China-focused consumer names, which as a group reported dismal 2011 earnings, were among the top percentage losers on Thursday. Want Want China slid 4.2 percent, while Hengan International lost 2.2 percent.
But at midday, they finished off lows after a private sector survey of purchasing managers showed that China’s services sector expanded in March and business confidence hit an 11-month high, though overall activity remained below its long-term average.
Dented hopes of quantitative easing by the U.S. Federal Reserve crimped Hong Kong markets, which were shut on Wednesday, hurting exporters such as Li & Fung, which slipped 3.8 percent to hit its lowest since March 13.
HSBC Holdings Plc, Europe’s largest bank, slipped 1.1 percent and was the top drag on the Hang Seng Index, hurt by renewed fears that the Euro zone debt crisis could escalate after a weak Spanish debt auction on Wednesday.
In Shanghai, the standout outperformers were non-bank financials after a slew of developments boosted sentiment, with non-banking financials seen most likely to benefit from further attempts to liberalise the financial industry.
Market watchers said on Wednesday that Chinese Premier Wen’s comments about busting a bank monopoly suggest he may be thinking of modest financial reforms, not a dismantling of the Big Four state-owned banks.
Citic Securities, the mainland’s largest listed brokerage, jumped 7.3 percent while Haitong Securities surged 8.4 percent.
Riskier sectors also benefitted from increased optimism with investors taking well to news of potential fresh inflows, after Beijing said on Tuesday it will raise the total quota for its qualified foreign institutional investor programme (QFII).
Limits on the main channel for foreign investment in Chinese securities will be boosted by $50 billion to $80 billion, as the current programme nears its limit.
Chinese railway-related companies were also strong after the sector reported forecast-busting 2011 earnings when mainland markets were shut. China Railway Construction jumped 5.1 percent and CSR Corp gained 3.6 percent. (Editing by Richard Borsuk)