China stocks fall as regulators tighten screws, Hong Kong also down

(Repeats to more subscribers, named item code)

* CSI300 -0.7 pct, SSEC -0.3 pct; HSI -0.5 pct, HSCE -0.3

pct

* Risk appetite still soured

* Asset managers trim equity exposure

* President Xi's speech signals ongoing tightening

SHANGHAI, April 28 (Reuters) - China's main stock indexes

fell on Friday and looked set for their third straight weekly

loss on fears that regulators will step up their latest

crackdown on riskier types of financing and speculation.

While China's regulatory enforcement sprees have tended to

wax and wane in the past, investors fear there may be no let up

in the latest campaign after President Xi Jinping made a rare

speech this week on financial stability.

Xi called on Tuesday for increased efforts to ward off

systemic risks to help maintain financial security, the official

Xinhua news agency said.

"We think it sends an important signal to support the

ongoing tightening of financial regulation and enforcement,"

Citi wrote in a recent note.

The blue-chip CSI300 index fell 0.7 percent to

3,423.68 points by the midday break, while the Shanghai

Composite Index lost 0.3 percent to 3,141.55.

The CSI300 looked set for a loss of 1.2 percent on the week

and the SSEC around 1 percent.

Sustained efforts by authorities to encourage or force more

deleveraging in the system could tighten liquidity and sour

investors' sentiment further, said Zhang Gang, an analyst with

China Central Securities, while adding he did not see further

substantial losses.

China watchers have generally expected another modest

increase in short-term interest rates by the central bank around

June, but see no aggressive tightening moves ahead of a major

leadership transition later in the year.

Still, the People's Bank of China (PBOC) and other

regulators have ramped up the pressure on a number of fronts as

they look to contain financial risks after years of debt-fueled

stimulus.

The PBOC has drained 815 billion yuan ($118.18 billion) on a

net basis from money markets via open market operations so far

this year, but has still stepped in and injected funds from time

to time when markets appeared to be growing too stressed.

"The decline in the second half of April was driven more by

soured sentiment, as speculative money suffered setbacks. It

could take time for the market to recover," a South China-based

fund manager pointed out.

Main sectors fell across the board on Friday, with losses

led by the consumer sector, which posted a 3 percent

loss as investors took profits after a strong rally.

Liquor maker Jiangsu Yanghe Brewery dived as

much as 10 percent to a 10-week low, poised for its worst day

since August, 2015.

In Hong Kong, stocks slipped as investors took profits.

The Hang Seng index fell 0.5 percent to 24,588.27,

though still looked set to end the week 2.3 percent higher.

The China Enterprises Index lost 0.3 percent, to

10,234.95.

(Reporting by Luoyan Liu and John Ruwitch; Editing by Kim

Coghill)