Sept 3 (Reuters) - Hong Kong stocks fell on Tuesday as a deepening political crisis threatens to plunge the city into economic recession, while festering Sino-U.S. trade tensions continue to curb risk appetite.
** But the decline was limited amid signs capital from mainland China is flooding the Hong Kong equity market.
** The Hang Seng index fell 0.4%, to 25,527.85, while the China Enterprises Index lost 0.7%, to 10,035.78.
** Hong Kong school and university students on Tuesday are due to boycott classes and hold pro-democracy rallies for the second straight day, further fuelling the political crisis in the Chinese-ruled city.
** The crisis was triggered in June by a now-suspended extradition bill, but has developed into a call for broader democracy in the former British colony amid fears of Beijing’s tighter control. The government has warned that the chaos would damage the city’s economy.
** Investors are worried about the health of the global economy, as Washington and Beijing slapped fresh tariffs on each other’s goods over the weekend, escalating the year-long trade war.
** But there are signs mainland investors have been buying Hong Kong shares via the stock Connect scheme amid market volatility. There has been a net inflow of mainland capital to the bourse for 16 consecutive weeks, the longest streak for around a year and a half, according to Caixin. ** The sub-index of the Hang Seng tracking energy shares dipped 0.9%, while the IT sector slipped 0.26%, the financial sector ended 0.4% lower and the property sector fell 0.39%. ** The top gainer on the Hang Seng was CSPC Pharmaceutical Group Ltd, which gained 1.5%, while the biggest loser was Geely Automobile Holdings Ltd, which fell 2.81%. ** China’s main Shanghai Composite index closed up 0.21% at 2,930.15, while the blue-chip CSI300 index ended up 0.14%. ** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.74%, while Japan’s Nikkei index closed up 0.02%. ** The yuan was quoted at 7.1777 per U.S. dollar at 08:41 GMT, 0.08% weaker than the previous close of 7.1717. ** The top gainers among H-shares were CSPC Pharmaceutical Group Ltd, up 1.5%, followed by New China Life Insurance Co Ltd, gaining 0.48%, and Ping An Insurance Group Co of China Ltd, up by 0.33%. ** The three biggest H-shares percentage decliners were Dongfeng Motor Group Co Ltd, which was down 4.29%, Guangzhou Automobile Group Co Ltd, which fell 3.22%, and China Railway Group Ltd, down by 2.72%. (Reporting by the Shanghai Newsroom; Editing by Subhranshu Sahu)