Hong Kong, China shares falter

Hong Kong and Shanghai shares surrendered early gains and ended 0.7 percent lower on Thursday, on sustained uncertainty over Europe's debt woes and the US economy. Investors stayed on the sidelines amid waning enthusiasm President Barack Obama's speech later in the day in which he is expected to outline plans to address stubbornly low unemployment as well caution over Europe kept investors largely on the sidelines.
"The market seems to have already discounted anything Obama might offer," said Tom Kaan, a director at Louis Capital Markets in Hong Kong. "But in my view the focus right now is squarely on Europe and there's just not enough to entice long-only's back into the market at this point."
The European Central Bank will meet later in the day with expectations building that it will halt its rate tightening cycle to support economies battered by the euro debt crisis. The benchmark Hang Seng Index fell 0.7 percent to close near the day's lows on light turnover, after rising as much as 0.6 percent at the open.
The China Enterprises index lost 0.4 percent. Brokerages, including Credit Suisse, cut their year-end forecasts for Hong Kong and China benchmark indices along with growth projections for earnings at Chinese corporates, which also weighed on sentiment, said traders.
HSBC Holdings Plc, up more than 1 percent earlier in the morning and the biggest support for the benchmark, pared gains to close just 0.1 percent higher. It is down more than 16 percent this quarter. Europe's biggest bank said it would cut 3,000 jobs in Hong Kong over the next three years as it targets its first wave of an aggressive global cost-cutting plan.
The biggest drag was shoe retailer Belle International Holdings Ltd which slumped 8.5 percent, its biggest single-day drop since becoming a constituent of the Hang Seng index last August. The footwear maker and distributor said its management would sell 240 million shares at a discount.
"The shares are to be sold at the lower end of a range, reflecting a lack of enthusiasm to buy the shares. Long-term funds are not interested in buying in this volatile market," said UOB Kay Hian sales director Steven Leung. Late in the day, traders said a large buy order through Sun Hung Kai Financial's brokerage unit for about 1.5 billion to 2 billion shares of China Life was spotted. The brokerage then started to withdraw bids but not before about 80 million shares were traded.
With the brokerage seen selling those shares just before the close China Life, trading as high as 1.2 percent after the midday break, closed down up 0.2 percent. Shares of Sun Hung Kai & Co fell 3.8 percent. On the mainland, the Shanghai Composite Index fell 0.7 percent, with cement counters remaining under pressure on concern that slowing demand will hurt prices, particularly in eastern China. Anhui Conch Cement Co Ltd fell 2.6 percent to a near 7-1/2 month low. Huaxin Cement Co Ltd fell 4 percent. The Shanghai Composite, which is down over 10 percent this year - has struggled this year amid government steps to tame inflation and control bank lending.