China, Hong Kong shares ease as growth, deflation worries resurface
SHANGHAI, May 4 (Reuters) - China stocks dipped on Wednesday morning, led by resource firms, as the Shanghai market comes under pressure near key technical resistance and after signs of subdued manufacturing activity.
Hong Kong shares fell roughly 1 percent by midday, tracking sluggish trading in Asian markets as worries about global growth and creeping deflation resurfaced.
The Shanghai Composite Index lost 0.2 percent, to 2,986.19 points by the lunch break, failing to break through the 3,000 mark amid light trading. China's blue-chip CSI300 index fell 0.3 percent, to 3,204.98 points.
Shanghai market trading volumes have hovered near 4-month lows in recent sessions, restrained by a lack of strong conviction over China's economic recovery, while the market's rebound since early March appears to be unravelling.
The sluggish mood was not helped by a private survey on Tuesday, which showed activity at China's factories shrank for the 14th straight month in April as demand stagnated, forcing companies to shed jobs at a faster pace.
Most sectors fell in China, with resource shares among the biggest decliners as the country's commodities futures market continued to cool in the wake of a regulatory crackdown on speculation.
In Hong Kong, the Hang Seng index dropped 1.0 percent, to 20,469.62 points, while the Hong Kong China Enterprises Index lost 1.2 percent, to 8,648.18.
Energy, raw material and financial shares led main indexes lower.
Index heavyweight HSBC Holdings Plc dropped 2.1 percent. The lender stuck to its promise of higher dividends on Tuesday, after a 14 percent profit drop fuelled doubts among some investors about the bank's ability to increase payouts.
(Reporting by Samuel Shen and Pete Sweeney; Editing by Jacqueline Wong)
