Hong Kong shares down, banks lead losses; China up

* BEA hits high, Taifook jumps on sale talks

* China shares rise with the consumer sector strong
(Updates to midday)

By Donny Kwok and Claire Zhang

HONG KONG/SHANGHAI, Nov 12 (Reuters) - Hong Kong stocks had
retreated 0.49 percent by midday on Thursday, with index
heavyweight HSBC (0005.HK) and property issues leading losses,
but shares in China were up on consumer sector strength and after
an economic policy statement by China's premier.

HSBC Holdings edged down 0.64 percent to HK$93.40, after
rising as much as 6.2 percent to a 13-month high in the previous
session after it announced the first improvement for three years
in losses on U.S. consumer credit.

Property shares declined, with Wharf Holdings (0004.HK) down
2.41 percent and Henderson Land (0012.HK) down 1.77 percent.

"The market lacked strength for further gains and
consolidation is needed for the market to take a breather," said
Ben Kwong, chief operating officer at KGI Asia.

Players took to the sidelines to wait for fresh incentives,
focusing on the movement of the already weak U.S. currency and
fund flow directions, traders said.

The benchmark Hang Seng Index .HSI fell 111.18 points to
22,516.03 at midday, ending four straight sessions of gains.
Turnover increased slightly to HK$40.97 billion ($5.3 billion),
from midday Wednesday's HK$38.8 billion.

The China Enterprise Index .HSCE of top locally listed
mainland Chinese stocks fell 0.32 percent to 13,416.78.

Bank of East Asia (0023.HK) rose to a 16-month high of
HK$36.50, extending gains in the previous session on talk the
bank could be a takeover target for Malaysian conglomerate Guoco
Group (0053.HK). At midday it stood at HK$34.55, up 3.6 percent.

Guoco said its stake in Bank of East Asia remained one of its
strategic investments. [ID:nHKG335795]

Financial services firm Taifook Securities (0665.HK) rose to
a 23-month high of HK$4.95 before steadying at HK$4.54, up more
than 15 percent. Major shareholder NWS (0659.HK) said it was in
talks to sell part or all of its 61.86 percent stake, without
giving details. A local newspaper cited market rumours that China
Construction Bank (0939.HK) could be the buyer.

Geely Auto (0175.HK) rose nearly 10 percent to an all-time
high of HK$3.55 after the Chinese automaker announced the
completion of a fundraising deal with Goldman Sachs (GS.N).

Galaxy Entertainment (0027.HK), one of six gambling licence
holders in Macau, fell 4.39 percent to HK$3.70. It raised the
estimated cost of its project on the Cotai Strip by 40 percent to
about HK$14.1 billion ($1.8 billion) as a result of design
changes, media said on Thursday. [ID:nHKG370202]

China Resources Enterprise (0291.HK) lost 1.49 percent to
HK$26.40 after JP Morgan downgraded the Chinese conglomerate to
"neutral" from "overweight" following a recent rally, saying it
would be difficult for the stock to continue to outperform
despite strong growth prospect for the second half.

Bank of China (3988.HK) shares lost 1.88 percent to HK$4.70.
The Chinese bank aimed to more than double lending this year from
2008 to more than 1 trillian yuan ($146 billion), the top
executive of the country's biggest foreign exchange lender said
on Wednesday. [ID:nPEK343169]

SHANGHAI RISES; CONSUMER SECTOR STRONG

China's key stock index rose 0.64 percent in morning trading,
with the consumer sector strong after China's premier said the
government's accommodative policy stance would be maintained,
while the central bank hinted at a resumption of yuan
appreciation against the dollar.

The Shanghai Composite Index .SSEC ended the morning at
3,195.361 points, after snapping an eight-session rally on
Wednesday when it ended marginally weaker.

Gaining Shanghai A shares outnumbered losers by 675 to 171,
while turnover slipped to 74 billion yuan ($11 billion) from
Wednesday morning's 75 billion yuan.

Premier Wen Jiabao said on Thursday that China would stick to
its active fiscal policy and loose monetary measures even though
economic recovery was on more solid footing and after
weaker-than-expected new lending data for October on Wednesday.
[ID:nPEK374190]

"Although new lending is expected to remain weak,
expectations of yuan appreciation will encourage money to flow
into China," said Li Wenhui, a senior analyst at Huatai
Securities in Shanghai.

He said the index would be confined in the coming days
between key psychological levels at 3,100 and 3,200 points.

Analysts said profit-taking pressure loomed over the market
after a nearly uninterrupted climb since late last month but
sentiment remained strong as a result of the upbeat outlook for
China's economy and corporate earnings.
China sent its clearest signal yet that it was ready to allow
yuan appreciation after an 18-month hiatus, saying late on
Wednesday that it would consider major currencies, not just the
dollar, in guiding the exchange rate. [ID:nSP466424]

The consumer sector was strong, with Tonghua Grape Wine
(600365.SS) and home appliance maker Hefei Meiling 000521.SZ up
by their 10 percent daily limits.

Huatai Securities' Li said the consumer sector looked certain
to show a solid increase in fourth-quarter earnings.

China Minsheng Banking (600016.SS) rose 1.25 percent to 8.11
yuan. The official China Securities Journal reported that its
$4.07 billion Hong Kong initial public offering had attracted
several high-profile domestic and overseas bidders.

Auto shares were firmer, with Changan Auto (000625.SZ) up
1.43 percent at 15.64 yuan. China said it aimed for its exports
of vehicles and parts to make up 10 percent of global trade in
those goods by 2020, as it unveiled guidelines for support for
exports in the sector. [ID:nPEK329787]

China Merchants Securities Co, which plans to raise up to
11.1 billion yuan through an initial public share offering in
Shanghai, said its IPO had been nearly 94 times subscribed, tying
up a massive 1.1 trillion yuan. [ID:nSHA372583]

Money from unsuccessful subscriptions would be unfrozen on
Friday and some of that may flow back into the market, analysts
said.
(US$1=HK$7.75)
(Editing by Chris Lewis)