* Drop in tourists from China, volatile stock market hit sales
* Govt says retail sector to be constrained by weak tourism
* Sept sales of jewellery, watches down 22.9 pct y/y
HONG KONG, Nov 3 (Reuters) - Hong Kong retail sales fell for a seventh straight month in September as a drop in Chinese tourists and weak consumer sentiment amid a volatile stock market hurt retailers.
Retail sales dropped 6.4 percent from a year earlier, the biggest percentage decline since January this year, to HK$35.2 billion ($4.54 billion). That followed a revised 5.3 percent fall in August. In volume terms, September sales slipped 3.1 percent.
“The subdued performance of retail sales reflected the weakening of inbound tourism and, to some extent, the spillover of heightened stock market volatility during the summer on consumer sentiment,” the government said in a statement.
It added that retail sales slackened further with most types of retail outlets showing year-on-year declines in sales.
“Looking ahead, retail business will likely be still constrained by the weak performance of inbound tourism in the near term,” the government said. “Much will also depend on how the dimmer global economic outlook will affect the economy and local consumer sentiment going forward.”
The strong Hong Kong dollar - which is pegged to the U.S. dollar - has made the city an expensive destination. China’s wealthiest tourists are also now heading to more exotic destinations.
Total tourist arrivals slipped 4 percent in September from a year ago. Mainland visitors, which accounted for 77 percent of the visitors to Hong Kong, fell 4.7 percent in the month, according to Hong Kong Tourism Board data.
Hong Kong’s comparatively high rents and wages have hurt companies as fewer mainland Chinese tourists have come to the city to buy handbags, watches and designer clothing.
September sales of jewellery, watches, clocks and valuable gifts were down 22.9 percent on a value basis in the biggest percentage drop since June 2014. It compared with a 8.8 percent decline in August.
Clothing and footwear were down 11.6 percent on the same basis while department stores slid 5.1 percent.
In October, cosmetic chain operator Sa Sa International had warned of a more than 50 percent drop in 6-month profit ended in September due to a worsening operating environment while same store sales fell 10 percent in the July-September quarter.
Chow Tai Fook Jewellery Group Ltd also said its same store sales in Hong Kong fell 13 percent for the three months ended Sept. 30.
$1 = 7.7502 Hong Kong dollars Reporting by Donny Kwok; Editing by Jacqueline Wong