SHANGHAI: China shares fell on Friday dragged down by financials and consumer firms, while a sharp drop in gaming and social media giant Tencent Holdings Ltd despite a forecast-beating profit jump weighed on the Hong Kong's benchmark index.

At the midday break, the Shanghai Composite index was down 0.45% at 3,491.04.
China's blue-chip CSI300 index was down 0.84%, with its financial sector sub-index leading losses, falling 1.29%.

The consumer staples sector shed 1.04%, the real estate index lost 0.43% and the healthcare sub-index fell 0.73%.

But commodities firms rebounded as analysts said China's pledge to strengthen management to curb "unreasonable" increases in commodity prices are likely to have only a temporary effect.

The CSI300 energy index added 0.88% and the CSI A-share resource industries index rose 0.92%.

Chinese H-shares listed in Hong Kong rose 0.42% to 10,687.89, while the Hang Seng Index was down 0.21% at 28,391.89.

The Hang Seng was hit by a 3.86% drop in index heavyweight Tencent Holdings Ltd despite a 65% surge in first-quarter profit, beating forecasts.

Crypto-related shares in Hong Kong slumped after US Federal Reserve chief Jerome Powell said cryptocurrencies pose risks to financial stability and indicated that greater regulation may be warranted.

Okg Technology Holdings Ltd, an affiliate of crypto exchange OK Coin, fell 4.26% and Huobi Tech, an affiliate of crypto exchange operator Huobi, lost 1.23%.

But following a regulatory announcement of a tougher ban by Beijing on crypto-related services by financial companies, market players in China said it was business as usual in the country.

The smaller Shenzhen index was down 0.2%, the start-up board ChiNext Composite index was weaker by 0.57% and Shanghai's tech-focused STAR50 index was down 0.68%?.

The yuan was quoted at 6.4342 per US dollar, 0.02% firmer than the previous close of 6.4355.