China stocks fall on weak commodity prices, reduced liquidity

SHANGHAI (Reuters) - China stocks began 2016's final week on a bearish note, as lower commodity prices hurt raw material and energy shares.

Hong Kong markets were closed on Monday for a holiday.

The CSI300 index was down 0.6 percent, to 3,286.47 points, at the end of the morning session, while the Shanghai Composite Index had dropped 0.8 percent, to 3,085.82 points.

Zhang Qi, analyst at Haitong Securities in Shanghai, said sentiment was dampened by liquidity stress toward the year-end as demand for cash increased.

Also curbing risk appetite was news late on Friday that China's securities regulator urged five investment banks to correct their faults unveiled in a recent inspection, while the Shanghai Stock Exchange stepped up a crackdown on book-cooking ahead of the release of annual reports.

Raw material stocks led Monday's sell-offs, with an index tracking the sector down more than 2.1 percent at the lunch break.

Shares of Baoshan Iron & Steel Co Ltd and Wuhan Iron and Steel Co Ltd retreated 2.9 percent and 2.6 percent respectively, as futures contract of rebar lost around 3.3 percent.

An index tracking energy stocks lost nearly 2 percent after futures contract of coke slumped.

Reflecting concerns about recent pollution in Beijing and elsewhere, healthcare stocks gained nearly 0.6 percent, bucking the board trend.

(Reporting by Jackie Cai and John Ruwitch; Editing by Richard Borsuk)