Hong Kong shares end 0.53 per cent lower

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The benchmark Hang Seng Index fell 126.84 points to 23,876.86 on turnover of HK$78.02 billion ($10.00 billion). Mainland Chinese banks and resource producers led the losses.

"The earnings growth of China banks will likely be lower this year due to policy tightening from banking authorities to restrain banks from borrowing more, and that will likely weigh on the benchmark index," Francis Lun, general manager at Fulbright Securities, said.

Beijing said Thursday its economy grew a quicker-than-expected 10.3 per cent last year while inflation was 3.3 per cent, higher than the government's targeted 3 per cent.

However, Ben Kwong, KGI Asia's chief operating officer, said the Hong Kong market had largely factored in a potential rate hike in the near term.

Coal producer China Coal fell 2.3 per cent to HK$11.76, while peer China Shenhua dropped 2.0 per cent to HK$31.90. Offshore oil producer CNOOC fell 2.0 per cent to HK$18.64.

Banking heavyweight Industrial and Commercial Bank of China (ICBC) fell 1.0 per cent to HK$5.89, and China Construction Bank was down 0.3 per cent at HK$7.03.

Mobile operator China Unicom bucked the trend, rising 2.3 per cent to HK$12.34 after it said it gained 1.28 million 3G subscribers in December, up from 1.12 million additions the previous month.

On the mainland, Chinese shares closed up 1.41 per cent due to expectations that authorities would hold off announcing new monetary tightening measures over the weekend and instead allow the market to take a breather, dealers said.

The Shanghai Composite Index, which covers both A and B shares, was up 37.64 points at 2,715.29 on turnover of 102.8 billion yuan ($15.8 billion).

"Some investors bought stocks because they said they don't expect the central bank to raise interest rates in the coming days," Qian Weihai, an analyst at Shanghai Securities, told Dow Jones Newswires.

Banking heavyweights were among the day's big gainers due to expectations of strong 2010 earnings.

Citic Bank gained 2.4 per cent to reach 5.17 yuan after the lender projected a more than 50 per cent rise in its 2010 net profit.

ICBC ended 1.7 per cent higher at 4.22 yuan, and Agricultural Bank of China rose 1.6 per cent to 2.62 yuan.

Blue chips in other sectors also gained after losses in the previous sessions.

China State Construction Engineering ended 5.8 per cent higher at 3.63 yuan after falling 1.4 per cent Thursday, while shipping company COSCO rose 3.8 per cent to 10.10 yuan after shedding 1.2 per cent in the previous session.