* HK->Shanghai Connect daily quota used 0.3 pct, Shanghai->HK daily quota used 0.1 pct
* FTSE China A50 -0.9 pct, BNY Mellon ADR China Select Index +0.9 pct
SHANGHAI, May 29 (Reuters) - China and Hong Kong stocks fell on Tuesday, as investors were concerned about credit risks amid more bond defaults, while traders took a grim view on the prospect of fresh elections in Italy.
** The CSI300 index fell 0.6 percent to 3,809.42 points at the end of the morning session, while the Shanghai Composite Index lost 0.6 percent to 3,116.59 points. ** The Hang Seng index dropped 0.6 percent to 30,601.31 points, while the Hong Kong China Enterprises Index slipped 1.0 percent to 11,996.23. ** China Energy Reserve & Chemicals Group Co (CERCG) said it failed to repay a $350 million bond that matured earlier this month due to a “tightening in credit conditions”, the latest Chinese company to default amid a crackdown on financial risk. ** It is the latest in a wave of corporate debt defaults amid a broad government-led campaign to crack down on risky financing, and follows a reminder from China’s securities regulator that exchanges should monitor default risks. ** “Before any changes in (Beijing’s) policies, credit risks will continue to spread and more companies will face bond insurance failure or bond defaults, which in turn will continue to dampen risk appetite,” Xu Biao, chief analyst, TF Securities, wrote in a note. ** For the moment, the core concern for China’s market is the liquidity problem that could be triggered by credit risks, Xu added. ** The political situation in Italy also added to pressure on sentiment, as investors feared Italy’s election campaign could focus on the country’s continued membership of European institutions and strengthen populist parties’ hand. ** On the mainland, most sectors lost ground, led by real estate firms , whose index tumbled 3.7 percent, with Future Land hitting a five-month low as the developer flagged lawsuit risks for its unit. ** Market participants were on the defensive as they sought shelter in consumer and healthcare firms. ** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.44 percent, while Japan’s Nikkei index fell 0.83 percent. ** The yuan was quoted at 6.4124 per U.S. dollar, 0.24 percent weaker than the previous close of 6.3969. ** The largest percentage gainers in the main Shanghai Composite index were Henan Taloph Pharmaceutical Stock Co Ltd up 10.1 percent, followed by Ningbo Marine Co Ltd gaining 10.05 percent and Shanghai Golden Bridge Info Tech Co Ltd up by 10.03 percent. ** The largest percentage losses in the Shanghai index were Hainan Haiqi Transportation Group Co Ltd down 9.73 percent, followed by GuangDong GenSho Logistics Co Ltd losing 9.54 percent and Guangdong Dcenti Auto-Parts Stock Ltd Co down by 9.22 percent. ** The top gainers among H-shares were China Gas Holdings Ltd up 2.25 percent, followed by Hengan International Group Company Ltd gaining 2 percent and China Shenhua Energy Co Ltd up by 0.75 percent. ** The three biggest H-shares percentage decliners were China Vanke Co Ltd , which dropped 2.39 percent, New China Life Insurance Co Ltd which slipped 2.2 percent and Anhui Conch Cement Co Ltd down by 2.2 percent. ** About 6.97 billion shares have traded so far on the Shanghai exchange, roughly 50.5 percent of the market’s 30-day moving average of 13.79 billion shares a day. The volume traded was 12.88 billion as of the last full trading day. ** As of 04:05 GMT, China’s A-shares were trading at a premium of 18.89 percent over the Hong Kong-listed H-shares.
Reporting by Luoyan Liu and John Ruwitch, Editing by Sherry Jacob-Phillips