* HSI off 0.3 pct on the day, up 2.9 on the week
* CSI300 up 0.1 on Friday, up 1.8 pct this week
* H-shares have best week in nearly a year
* Profit-taking hits outperformers in past two days
* Hopson Development jumps, Citi upgrade helps
By Clement Tan
HONG KONG, Jan 4 (Reuters) - Hong Kong shares ended their best week in six on a weaker note, as investors on Friday took profit on outperformers in the past two days after the U.S. Federal Reserve signalled growing concern about its stimulative monetary policy.
The Fed's asset-purchase programme has been among the chief reasons for the swelling inflows that have buoyed markets in the Chinese territory. Reticence in the latest Fed minutes about further growing its $2.9 trillion balance sheet could limit capital flows.
The Hang Seng Index fell 0.3 percent from Thursday's 19-month high, but posted its best weekly showing since the one that ended Nov. 23, rising 2.9 percent. The China Enterprises Index of the top Chinese listings in Hong Kong jumped 4.9 percent this week despite slipping 0.4 percent on Friday.
In the mainland, the CSI300 of the top Shanghai and Shenzhen A-shares closed up 0.1 percent on the day and 1.8 percent for the holiday-shortened week. The Shanghai Composite Index rose 0.4 percent on Friday and 2 percent this week.
Hong Kong turnover stayed above its 20-day moving average, but slipped to the lowest in the first three trading days of the year. Shanghai's volume on the first trading day in 2013 after a three-day New Year break was its best in more than a week.
"I won't be too worried about the Fed changing their tone at this point, the U.S. economy will need to improve further from here before that will happen," said Wang Ao-chao, UOB-Kay Hian's Shanghai-based head of China research.
"We are coming off overbought levels today. This cyclical-led rally in offshore Chinese shares should continue in the next few weeks, China's improving economic data will help," Wang added.
Relative strength index (RSI) readings suggest that mainland Chinese indexes are at their most overbought levels since October 2010, while slim losses on the day pushed the China Enterprises Index marginally off that milestone.
Shares of HSBC Holdings slid 1.6 percent from Thursday's 20-month closing high and were the Hang Seng Index's top drag. China-focused footwear retailer Belle International tumbled 3.2 percent on Friday after closing at a record high the day before.
Chinese non-banking financial and coal stocks were broadly weaker after leading the surge in the first two trading days of 2013 after a last minute U.S. deal averted the fiscal cliff.
Yanzhou Coal, which gained a total of 10 percent on Wednesday and Thursday after diving 23 percent in 2012, declined 0.9 percent from Thursday's near-eight month high.
Shares of China Life Insurance slipped 0.4 percent in Hong Kong from Thursday's 18-month high, while Ping An Insurance, its smaller rival, dropped 0.5 percent.
The mainland's securities regulator said last weekend that it plans to allow eligible securities houses and insurers' asset management units to develop and manage mutual funds in a bid to reinvigorate an industry struggling to produce returns for investors.
This follows an announcement last week allowing brokerages to sell subordinated debt, and the Chinese central bank pledging to quicken the pace of financial sector reform.
SMALL GAINS FOR A-SHARES
Chinese insurers, along with urbanization-related counters, helped mainland Chinese indexes reverse midday losses in a volatile first trading day after an extended New Year holiday. Both benchmarks had started Friday up more than 1 percent.
In Shanghai, Ping An Insurance gained 4 percent, while China Railway Group soared 5.9 percent and Jiangxi Copper spiked 5.7 percent.
Chinese property counters were also strong, with the Shanghai property sub-index an outperformer among sectors, up 1.9 percent after a string of favourable sales reported for December in the last few days.
Poly Real Estate gained 4.3 percent, while China Vanke's Shenzhen-listed A-shares stayed suspended. Speculation was rife in news media in Hong Kong and the mainland about its impending B-shares relisting in Hong Kong.
In Hong Kong, the Chinese property sector was broadly weaker after seeing strong gains earlier this week. Hopson Development was an outlier, jumping 10.5 percent to close at HK$16.06, its highest since May 2008.
In a note dated Jan. 3, Citi analysts upgraded their target price for Hopson by 27 percent to HK$25.16, saying its land bank in Beijing, Shanghai, Guangzhou and Tianjin should make Hopson the biggest beneficiary as the Chinese land market heats up.
Thomson Reuters IFR reported earlier this week that Hopson will embark on a series of fixed income investor update meetings from Jan. 7. Such meetings are often used to test appetite and could result in a subsequent deal.
Country Garden's and Kaisa Group's successful tapping of the credit market on Thursday has raised hopes of a similar fund-raising move that will not dilute equity stakes.