(Updates to midday)
* HSI down 0.3 pct, CSI300 down 0.1 pct
* Turnover in HK, Shanghai midday volume nears 2012 lows
* Hutchison, Cheung Kong Holdings weak after UK utilities acquisition
* China property A-shares weak after Nanjing clarification
By Clement Tan
HONG KONG, July 25 (Reuters) - Hong Kong shares looked set for their third straight daily loss on Wednesday, dragged lower by local conglomerate Hutchison Whampoa after a group of companies it controls announced plans to acquire a UK gas company.
Strength in defensive sectors and low turnover pointed to further weakness amid deepening worries that Spain might need a bailout and signs that Greece may need a further debt restrucuring, as well as a slew of corporate profit warnings as China's slowing economy takes its toll.
The Hang Seng Index was down 0.3 percent at 18,844.2 points by midday, though it managed to pull off early lows. The China Enterprises Index of the top Chinese listings in Hong Kong shed 0.2 percent.
In the mainland, the CSI300 Index of the top Shanghai and Shenzhen listings was down 0.1 percent. The Shanghai Composite Index inched up 0.2 percent in midday volume that neared the year's lows.
"We are seeing people being more defensive going into the earnings season," said Hong Hao, chief strategist at Bank of Communications (BoComm) International Securities.
"GOME's weakness is a measure of how people still had expectations of a strong recovery in China not too long ago and are now coming to terms with reality," Hong added.
Shares of Bain Capital-backed GOME Electrical Appliances Ltd tumbled 10.5 percent in Hong Kong after China's second-largest home appliance retailer warned it expects to post a net loss for the first half of 2012 attributable to its e-commerce business.
Li Ka-Shing's Hutchison Whampoa was the top drag on the Hang Seng Index, shedding 2 percent to its lowest since June 29. It is up 3.1 percent in 2012 to date, compared with the 2.2 percent gain on the Hang Seng benchmark.
Property developer Cheung Kong (Holdings) Ltd, an affiliate of Hutchison, said it had formed a joint venture with Cheung Kong Infrastructure Holdings Ltd, Power Assets Holdings Ltd and the Li Ka Shing Foundation Ltd to buy UK gas company Wales and West Utilities for 645 million pounds ($1 billion).
Cheung Kong Holdings slipped 0.8 percent while Power Assets shed 1.2 percent and trading in Cheung Kong Infrastructure was suspended on Wednesday before markets opened.
In onshore Chinese markets, property developers were weak after the Nanjing housing bureau said mainland news reports on Tuesday that the city was lifting home purchasing restrictions were a "misunderstanding".
The news had triggered strong gains for the sector in the A-share market on Tuesday, but Chinese property developers were among the bigger percentage losers on Wednesday.
The Chinese Academy of Social Sciences has suggested that cancelling the mortgage rate discount for first time homebuyers and pre-sale practice are necessary moves to prevent a sharp rebound in home prices, according to mainland news outlets on Wednesday.
The Shanghai property sub-index fell 1.6 percent. Poly Real Estate was down 1.8 percent, poised for its fifth daily loss in six sessions.
Poly Real Estate shares are still up 35 percent so far this year, although investors have been taking profits in recent sessions after official data last week showed housing prices rising for the first time in nine months, sparking fears Beijing could clamp down further on the sector. (Editing by Kim Coghill)