The China Enterprises Index of top locally listed mainland Chinese stocks was down 0.54 percent at 12,290.26. Market turnover fell to HK$69.04 billion ($8.90 billion) from Friday's HK$84.28 billion. "The whole week has many uncertainties," said Peter Lai, a director with DBS Vickers.
"US banks are going to announce their results and if they are bad that will undoubtedly push down the Dow Jones Industrial Average, which will drag on the Hang Seng Index." "The Hang Seng Index will be swinging widely and wildly." The index had retreated as much as 1.54 percent earlier on Monday before trimming losses.
"On Friday, we were a bit oversold so there's some bargain-hunting emerging," said Alex Wong, a director with Ample Finance Group. "Right now, people are still cautious but I don't think the market is too bearish." US stocks slid on Friday after J.P. Morgan Chase & Co reported deep fourth-quarter loan losses and raised concerns about bank profits.
Property developers, which have fallen in the past week, were among the biggest losers on the index, slipping on persistent worries that Beijing's moves to cool the real estate market could cloud their outlook. Henderson Land ended down 1.6 percent at HK$55.20. China Overseas Land was down 1.56 percent at HK$15.12, while New World Development lost 1.51 percent to HK$14.32.
Chinese banks Industrial and Commercial Bank of China, Bank of Communications (BoCom) and China Construction Bank, weighed down in the past week by fears that Beijing would rein in lending, ended higher by midday as investors sought bargains after early declines. ICBC and CCB recovered by midday after falling earlier to their lowest levels in more than three months. ICBC was up 0.86 percent at HK$5.87, while CCB had risen 0.49 percent to HK$6.17.
BoCom advanced 1.02 percent to HK$8.88. Casino operators Wynn Macau and Sands China fell as investors sold high-beta stocks in tandem with broader weak market sentiment, analysts said. Wynn Macau was down 3.7 percent at HK$10.42, while Sands China had slipped 4.97 percent to HK$11.10. China's key stock index ended 0.4 percent higher, with airlines surging on signs of official aid and improved earnings although heavily weighted financial issues eased as investors grew cautious about possible moves to tighten lending.
The Shanghai Composite Index moved in a narrow range before ending at 3,237.098 points, after eking out a 0.9 percent gain last week. Gaining Shanghai A shares outnumbered losers 730 to 161, while turnover rose to 169 billion yuan ($24.75 billion) from Friday's 151 billion yuan.
Airlines rose with Air China, the country's flag carrier, advancing 4.62 percent to 11.09 yuan after saying its state parent had obtained a 1.5 billion yuan cash injection from the government. China Eastern Airlines jumped its 5 percent daily limit to 6.65 yuan after estimating it had returned to profitability in 2009, while Shanghai Airport gained 7.27 percent to 20.51 yuan.
"Shares traded actively, although the index is unlikely to jump sharply given that investors are waiting for further direction from economic data which is due on Thursday," said Wen Lijun, analyst at Nanjing Securities. On the negative side, the stock regulator has been adding huge new share supplies to support the government's campaign to clamp down on excessive asset prices since early December.
China XD Electric Co, the nation's largest maker of electricity transmission and distribution equipment, plans to raise as much as 10.27 billion yuan in the country's first major initial public offering this year. "Investors remain cautious with the banking sector still sluggish on policy concerns, while officials have added more share supplies to prevent a stock price bubble," said Zhang Xiang, chief strategist at Guodu Securities in Beijing.
"The index is expected to be rangebound in the short term." Brokerages were weak, with CITIC Securities, China's biggest listed brokerage, sagging 3.35 percent to 30.91 yuan after saying its wholly owned fund unit China Asset Management Co had been punished by regulators for failing to comply with stake ownership rules.
The banking sector was mixed, with top lender Industrial and Commercial Bank of China flat at 5.08 yuan. China's banking regulator has asked banks to be more cautious on their lending strategies this year, as Beijing seeks to avoid high inflation and overheating in the world's third-largest economy. Anhui Xinhua Media made a firm debut in Shanghai, rising to 17.63 yuan, up 49 percent from its IPO price.