Hong Kong shares slip from Aug 2011 high, profit taking ends China rally

* HSI -0.3 pct, H-shares -0.9 pct, CSI300 -0.7 pct

* Chinese banking shares weak after recent outperformance

* Galaxy Entertainment at record high

HONG KONG, Dec 20 (Reuters) - Hong Kong shares slipped from

near 17-month highs in lackluster Thursday trade as investors

took profits on recent outperformers after doubts emerged over

progress on averting a fiscal crisis in the United States.

The Hang Seng Index went into the midday trading

break down 0.3 percent at 22,549.2, retreating from its highest

close since Aug. 1, 2011. The China Enterprises Index of

the top Chinese listings in Hong Kong dropped 0.9 percent.

In the mainland, the CSI300 of the top Shanghai

and Shenzhen listings shed 0.7 percent, on course for a first

daily loss in five days. The Shanghai Composite Index

slipped 0.5 percent.

"Trading at this time of the year can be quite tricky," said

Jackson Wong, Tanrich Securities' vice-president for equity

sales. "Investors are rotating out of outperformers and into

some laggards on some Chinese policy catalysts."

On Thursday, Chinese banking plays were key weaknesses in

both China and Hong Kong markets, extending losses after the

mainland's banking regulator ordered banks to tighten checks on

the sale of third-party financial products.

Shares of Bank of China (BOC) in Hong

Kong, which touched 52-week intra-day highs twice earlier this

week, slipped 0.6 percent. BOC shares in Shanghai shed 0.7

percent.

Growth-sensitive counters were also broadly weaker. Anhui

Conch Cement slid 3.1 percent in Hong Kong,

set for a third-straight daily loss after hitting on Monday its

highest intra-day levels since November 2011. In Shanghai,

Anhui's shares shed 2.2 percent.

Sentiment in onshore Chinese markets was also hurt by news

that the National Development and Reform Commission (NDRC) is

toughening up its rules on bond issuance, including banning

over-indebted firms from selling new bonds.

This reignited fears of oversupply in the stock market,

dousing hopes that the more than 800 companies that have

reportedly applied for stock listings could look to the bond

market as an alternate method of raising funds.

CHINA WIND POWER EXTEND GAINS

Bucking market weakness were some Chinese alternative energy

counters, which extended gains after mainland news outlets

reported that Beijing approved a second group of wind power

projects.

The state-run China Securities Journal newspaper reported on

Thursday that the State Council has issued new measures to

support the solar industry, including subsidies and tax breaks

to also benefit the wind power industry.

China Longyuan Power Group climbed 1 percent in

Hong Kong.

Galaxy Entertainment Group jumped 4.2 percent to a

record high, set for a fourth-straight daily gain after Deutsche

Bank analysts upgraded on Monday its target price by 5.4

percent.

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