* CSI300 slides 3 pct, SSEC down 2.2 pct
* Consumer sub-index drops 8.6 pct
* Industrial, consumer profit growth ebbing
* Yuan weakens closer to key level
* Hong Kong flat as HSBC profits offset worries in China (Updated with Hong Kong closer figures, comments)
By Andrew Galbraith
SHANGHAI, Oct 29 (Reuters) - China’s major stock indexes fell sharply on Monday as earnings reports on industrial and consumer firms sent fresh jitters through the market, raising concerns about the slowdown in economic growth and the impact of policy support so far.
The blue-chip CSI300 index closed 3.0 percent lower at 3,076.89 points, while the Shanghai Composite Index broke below 2,600 points to end 2.2 percent down at 2,542.10, bucking a modestly firmer tone to stocks in Asia ex-Japan.
“A-shares are being led by corporate earnings, and we expect third-quarter earnings growth to show a bigger slide than mid-year reports,” Huatai Securities’ analysts said in a note.
Both indexes are on track for their worst monthly performances since January 2016, with the Shanghai Composite down 9.9 percent and the CSI300 down 10.5 percent.
Profit growth at China’s industrial firms slowed for a fifth straight month in September as sales of raw materials and manufactured goods further ebbed, data showed on Saturday.
While the report weighed on sentiment, consumer firms led declines on Monday after Kweichow Moutai, the country’s most-famous producer of fiery baijiu liquor, reported sharply lower profit growth.
The CSI consumer sub-index dropped 8.63 percent. Kweichow Moutai fell the daily limit of 10 percent, while other distillers Wuliangye Yibin and Luzhou Laojiao dropped sharply - down the 10 percent daily limit and 7.2 percent, respectively.
Financial,, real estate and healthcare sub indexes all fell more than 2 percent. The smaller Shenzhen index fell 2 percent and the start-up board ChiNext Composite index dropped 1 percent.
In Hong Kong, the main Hang Seng index gained 0.38 percent and the index for Chinese companies listed in the city slipped 0.46 percent.
Heavyweight HSBC Holdings Plc rose more than 5 percent after stronger-than-expected quarterly profit, supporting the broader Hong Kong market.
The next test for sentiment will come from Chinese insurers and banks reporting quarterly results.
“If these Chinese companies’ revenues are not strong enough, then the market may think China’s policy support (for the economy) is not enough,” said Linus Yip, chief strategist at First Shanghai Securities.
The fall in mainland stocks prompted some money into Chinese government bond futures, boosting the 10-year Treasury futures for December delivery, the most-traded contract, by 0.2 percent.
The yield on 10-year Chinese government bonds was 3.556 percent, according to Refinitiv data, down 9.7 basis points since the end of September.
China’s yuan fell slightly against a firmer U.S. dollar as traders eye the sensitive 7-per-dollar level, with some worried a breach of that mark could risk increased capital outflows and further pressure on the economy and financial markets.
Policy insiders have told Reuters that China is likely to use its currency reserves to defend 7 to guard against speculation and strong outflows.
However, some analysts believe a drop through that level may be inevitable if the economy continues to weaken, the dollar remains firm and pressure from U.S. trade tariffs intensifies.
The onshore yuan ended trading at 6.9560 per dollar, weaker than Friday’s late night close of 6.9448 per dollar, marking the yuan’s weakest domestic close since 2008. (Reporting by Andrew Galbraith; Additional reporting by Noah Sin; Editing by Kim Coghill and Neil Fullick)