Hong Kong shares have fallen 1.19 per cent, tracking regional bourses after a key index of Chinese manufacturing data slumped to a seven-month low.
The benchmark Hang Seng Index lost 270.44 points to 22,394.08 on Thursday on turnover of HK$71.12 billion ($A10.22 billion).
British bank HSBC said a preliminary reading for its China purchasing managers' index (PMI), which tracks manufacturing activity, fell to a seven-month low of 48.3 in February, in a sign of diminishing strength in the world's second-largest economy.
That marked a further tumble from the final reading of 49.5 in January, when the figure showed contraction for the first time in six months.
The index is a closely-watched gauge of the health of the Asian economic powerhouse. A reading above 50 indicates growth, while anything below signals contraction.
Among Hong Kong shares, Chinese internet giant Tencent lost 3.09 per cent to HK$564.5, while refiner Sinopec Corporation surged 9.42 per cent to HK$6.62 and PetroChina gained 2.52 per cent to HK$8.15.
Banking giant ICBC dipped 2.69 per cent to HK$4.71 and HSBC Holdings slipped 1.65 per cent to HK$83.45.
Chinese shares also lost ground, with the benchmark Shanghai Composite Index ending down 0.18 per cent, or 3.77 points, to 2,138.78 on turnover of 130.9 billion yuan ($21.5 billion).
The Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 1.55 per cent, or 17.93 points, to 1,139.27 on turnover of 164.9 billion yuan.
"The PMI figure certainly had some impact on the market. But cheap valuations of blue-chip stocks as well as expectations for economic policies will boost buying interest in the short term," Zheshang Securities analyst Zhang Yanbing told AFP.
Investors were hoping the government might release favourable policies at the annual meeting of the legislature in early March. Media reports that insurers will be allowed to place more funds in the stock market also lent some support, analysts said.
Paper producers and equipment manufacturers led the declines.
Yueyang Forest & Paper fell 1.74 per cent to 3.39 yuan while Xiamen Anne slumped by its 10 per cent daily limit to 16.29 yuan.
Hangzhou Zhongheng Electric tumbled 5.29 per cent to 16.29 yuan and Anhui Xinlong Electrical lost 3.94 per cent to 8.30 yuan.
