* HSI -0.6 pct, H-shares -1.2 pct, CSI300 -1 pct
* A-share slide not panic, but slow grind: BoComm International
* Profit taking on outperformers, cyclicals suffer
* China autos sector mostly up after reported improvement in 2012
By Clement Tan
HONG KONG, Nov 28 (Reuters) - Shares in China fell on Wednesday, lingering at their lowest in almost four years and pulling the Hong Kong market, as better economic data snuffed out hopes of imminent monetary easing to accelerate recovery in the world's second largest economy.
A lack of progress in budget talks in the United States further weighed on markets as it reignited fears of a fiscal crisis in the world's largest economy, prompting investors to lock in profits.
The Hang Seng Index slipped 0.6 percent, while the China Enterprises Index of the top Chinese listings shed 1.2 percent. Both indexes have now lost about a third and more than half of last week's gains, respectively.
The CSI300 Index of the top Shanghai and Shenzhen listings slid 1.0 percent. The Shanghai Composite Index retreated 0.9 percent, sinking further from the 2,000-point level it closed below on Tuesday for the first time since January 2009.
This was the third-straight daily decline for all four benchmark indexes, and the weakness came in turnover that declined from Tuesday and was below its average in the past month.
"This isn't panic in the A-share market, but a systematic, slow downward grind," said Hong Hao, head of China research at Bank of Communications International Securities.
Hong said that industrial profit data on Tuesday gave further evidence that China's economy was improving, dousing hopes of monetary policy easing for those still expecting the A-share market will rebound into year's end.
"But they are waking up now, cutting their losses and getting out of the market, especially with the bumper crop of lockup expiry coming up in December, which will further decrease market volumes and result in more weakness," Hong said.
On Wednesday, growth-sensitive sectors were among the bigger percentage losers. Wuhan Steel slid 3.9 percent on the day, while its bigger rival Baotou Steel slumped 5.9 percent to its lowest closing level since July 5.
A-share proxy plays such as Chinese insurers and brokerages were also weak. China Life Insurance was down 1.3 percent in Hong Kong and 0.5 percent in Shanghai. Citic Securities lost 1.4 percent each in Hong Kong and Shanghai.
The Chinese real estate sector, key outperformers this year in mainland markets, was also weak. Poly Real Estate dived 3.5 percent in Shanghai, trimming 2012 gains to 32.1 percent.
This compares to the CSI300's 9.2 percent loss and the Shanghai Composite's 10.3 slide on the year.
CHINA OIL MAJORS WEAK
Chinese oil majors were among the top index drags as oil prices declined. Petrochina lost 1 percent in Hong Kong and 0.5 percent in Shanghai.
CNOOC Ltd closed down 1.7 percent at its lowest in more than a week after the state-owned company and its Canadian takeover target Nexen Inc withdrew and resubmitted their application for U.S. approval of their $15.1 billion deal.
A spokesman for the Canadian Prime Minister did not comment on a report that the federal government might want CNOOC to sell the 7 percent stake that takeover target Nexen holds in the large Syncrude oil sands joint venture, because fellow Chinese company Sinopec has a 9 percent stake in it.
Bucking broader market weakness, Chinese automakers were mostly higher after state news agency Xinhua reported automobile sales and output will both exceed 19 million units this year, a jump from last year's 14.5 million.
Great Wall Motor rose 1.2 percent in Hong Kong and 3 percent in Shanghai.