HONG KONG/SHANGHAI, June 25 (Reuters) - Hong Kong stocks slipped 0.6 percent by midday on Friday, as shares such as Foxconn (2038.HK) fell on fears that weak consumer spending in the United States could be a drag on earnings.
In Shanghai, China's main stock index fell 0.7 percent, hurt by modest losses in blue-chip stocks such as the country's No. 1 firm by market value PetroChina (601857.SS).
"Everyone is taking a wait and see attitude right now," said Peter Lai, a director at DBS Vickers in Hong Kong, who says he is bullish on Chinese domestic consumption stocks and importers after China's decision to unpeg the yuan from the U.S. dollar.
Hong Kong's benchmark Hang Seng index .HSI fell 123 points to 20,609. The China Enterprise Index .HSCE of top locally listed mainland Chinese stocks was down 1.25 percent at 11,786.
Market turnover rose to HK$29 billion ($3.8 billion), from midday Thursday's HK$26.8 billion.
Foxconn (2038.HK), the world's largest contract cellphone maker, fell almost 3 percent. The company supplies to top cellphone makers such as Nokia (NOK1V.HE), and any pullback in consumer spending will hit its bottom line.
Europe-focused fashion retailer Esprit (0330.HK) also slipped, declining more than 3 percent on renewed concern over the euro zone debt crisis and that the uncertain economic situation there could hurt demand.
Hong Kong stocks briefly breached its upper Bollinger Band on Monday, and other technical indicators such as the MACD have also turned bullish on the index since the beginning of this week, pointing to further gains ahead.
"I'm starting to see signs of fund flows back into the stock market, which makes me believe that we are likely to see a strong third quarter where stocks will climb," said DBS Vickers' Lai.
The Hang Seng index, which is down about 5.7 percent so far this year and was once one of the world's worst performing stock indexes, is expected to reach 23,500 by the end of this year, according to a Reuters poll on Thursday.
SHANGHAI FALLS
Another Reuters poll showed Shanghai shares will see only slight gains this year, as worries mount over the economy due to the euro zone debt crisis and steps to cool property prices.
The much-awaited mammoth initial public offering by Agricultural Bank of China [ABC.UL] also meant investors want to keep funds free for the offer, and were less keen to wager big bets in other stocks for now.
Trade was thin with analysts saying the market was still trying to find a floor after hitting a one-year low late last month.
"The market is trying to stabilise," said Zhang Qi, an analyst at Haitong Securities. "I also get the sense that everyone is waiting for the Agricultural Bank offer."
The Shanghai Composite Index .SSEC eased 0.73 percent, or 18.6 points by midday, to stand at 2,548.104.
That left the index well below its next upside resistance of 2,647.101, the 23.6 percent Fibonacci retracement of its steady drop since mid-April.
Volume remained extremely thin, falling to 25 billion yuan from Thursday's midday level of 26 billion yuan.
PetroChina (601857.SS) eased 0.3 percent to 10.73 yuan. Bank of China (601988.SS) also slipped 0.3 percent while Sinopec (600028.SS) lost 0.7 percent.
Agricultural Bank is set to raise more than $23 billion in a dual-listing in Hong Kong and Shanghai. A Chinese newspaper said on Friday its Shanghai-listed shares were 16 times oversubscribed.
The Shanghai Composite Index has shed 22 percent this year, the second worst-performing stock index after Greece's share index, as investors sold on worries the Chinese central bank may slow the economy too much by tightening monetary policy too far.
China's central bank has been steadily tightening policy this year to cool a buoyant property market.
