China stocks slump as economy worries offset SOE reform hopes; HK down

SHANGHAI (Reuters) - China stocks fell more than 3 percent on Monday morning as lingering concerns over the economy offset optimism that reform among state-owned enterprises (SOEs) would accelerate.

Hong Kong shares were also down, with investors focused on whether the United States would raise interest rates this month.

The CSI300 index fell 3.5 percent, to 3,229.76 points at the end of the morning session, while the Shanghai Composite Index lost 3.2 percent, to 3,097.71 points.

China CSI300 stock index futures for September fell 4.5 percent, to 3,156.8, 72.96 points below the current value of the underlying index.

Data released over the weekend showed that China's output of key industrial commodities including coal and steel weakened in August, as growth in China's investment and factory output missed forecasts.

The Bank of International Settlements said on Sunday that concerns over the world's major emerging economies, and in particular China, are growing as financial investors reassess the outlook for global growth.

"China's economy faces relatively big downward pressure, so investor sentiment remains weak," said Gu Yongtao, strategist at Cinda Securities.

Although China on Sunday unveiled details of how it would restructure SOEs, including partial privatisation and industry consolidation, "the plan has long been expected, so interest toward the theme could be short-lived," he said.

All main sectors fell, with small-caps leading the decline.

Shenzhen's start-up board ChiNext slumped 5.6 percent, while the CSI300 IT Index tumbled 6.9 percent.

But two key indexes tracking listed SOEs controlled by the central government outperform main indexes.

Brokerages shares slumped, led by Huatai Securities, Haitong Securities, Founder Securities and GF Securities after the brokerages were fined by regulators in their role in the grey-market margin financing business.

The Hang Seng index dropped 0.1 percent, to 21,482.22 points.

The Hong Kong China Enterprises Index lost 0.7 percent, to 9,654.82.

The index measuring price differences between dual-listed companies in Shanghai and Hong Kong continued to show highly disconnected markets, standing at 131.74.

A value above 100 indicates Shanghai shares are pricing at a premium to shares in the same company trading in Hong Kong, and vice versa.

The northbound quota for the Hong Kong-Shanghai Stock Connect, currently set at 13 billion yuan, saw net inflows of 0.19 billion yuan.

Total volume of A shares traded in Shanghai was 15.65 billion shares, while Shenzhen volume was 13.21 billion shares.

Total trading volume of companies included in the HSI index was 0.8 billion shares.

GRAPHICS:

China stock market graphics suite http://tmsnrt.rs/1fuUXmF

(includes timeline of crash, PE ratios, market caps)

A-share account openings spike http://bit.ly/1wvJ9S9

Comparison of stock indexes and selected company stocks

http://link.reuters.com/zak25w

Chinese A-shares vs developed and emerging stocks

http://link.reuters.com/rac25w

(Reporting by Samuel Shen and Pete Sweeney; Editing by Jacqueline Wong)