Hong Kong shares gain 0.34 per cent, Shanghai slips

The benchmark Hang Seng Index rose 79.28 points to 23,171.80. Turnover was 70.22 billion Hong Kong dollars ($9.03 billion).

The Hang Seng Index was led higher by financial firms following a strong Wall Street performance after President Barack Obama announced a deal with Republican foes on maintaining tax breaks.

Banking giant HSBC rose 1.0 per cent to 80.90 Hong Kong dollars, while rival Standard Chartered jumped 2.79 per cent to 228.60 after saying it was on track for another record year of income and profit this year.

In Shanghai, Chinese shares slid amid caution ahead of November inflation data due on Saturday, with expectations of an interest rate hike or other measures to damp down the mainland economy.

Shanghai's Composite Index closed down 1.32 per cent, led by property developers after a government think tank warned real estate prices in major cities were overpriced by as much as 70 per cent, dealers said.

The market, which covers both A and B shares, fell 37.60 points to 2,810.95 on turnover of 108.7 billion yuan ($16.2 billion).

Rate hike anticipation has grown since October's consumer price index rose 4.4 percent year-on-year, well above Beijing's three per cent comfort zone, particularly as food costs have surged.

Analysts said the central bank's decision to scrap a regular auction of three-year bonds on Thursday and the latest report about a worsening real estate bubble fuelled expectations of an interest rate hike this weekend.

"The expectations of monetary tightening measures hit the market again as the time the central bank scrapped the bond sale is very sensitive," said Wang Yinlong, an analyst at China Merchants Securities told Dow Jones Newswires.

The nation's biggest listed property developer China Vanke fell 3.8 per cent to 8.17 yuan and Poly Real Estate Group shed 4.5 per cent to 12.13 yuan.