HONG KONG - Hong Kong shares sank 1.28 per cent Tuesday as a pro-democracy demonstration in the city went into a third day while a gauge of Chinese manufacturing activity for September came in below expectations.
The Hang Seng Index ended 296.23 points lower at 22,932.98 on turnover of HK$84.73 billion (S$13.9 billion).
The market will be closed Wednesday and Thursday for public holidays.
Some of the financial hub's main thoroughfares remained closed on Tuesday as protestors dug in, saying they would not leave until Beijing gives in to their demands to be able to choose their own leader.
The campaign comes as China's Golden Week holiday begins on Wednesday, when big-spending mainlanders normally visit the city's luxury stores.
Adding to selling pressure was HSBC's final purchasing managers' index (PMI) for China, which came in at 50.2 for September.
While it was above the 50-point level that separates growth from contraction, it is lower than the 50.5 predicted in its preliminary reading and adds to fears about the Chinese economy.
"The data in September suggest that manufacturing activity continues to expand at a slow pace," said HSBC China Chief Economist Qu Hongbin. "We think risks to growth are still on the downside and warrant more accommodative monetary as well as fiscal policies."
HSBC fell 1.43 per cent to HK$79.55 and Hang Seng Bank lost 0.40 per cent to HK$124.7.
On Monday HSBC fell 1.77 per cent and Hang Seng shed 2.42 per cent.
China Mobile gave up 3.03 per cent and Internet firm Tencent lost 0.09 per cent to HK$115.5.
Conglomerate Cheung Kong Holdings sank 1.39 per cent to HK$127.90 and Henderson Land Development was 1.85 per cent lower at HK$50.30.
However, in China the benchmark Shanghai Composite Index rose 0.26 per cent, or 6.16 points, to 2,363.87 - its highest since February last year - on turnover of 166.9 billion yuan ($27.2 billion).
The Shenzhen Composite Index, which tracks stocks on China's second exchange, gained 0.65 per cent, or 8.56 points, to 1,333.50 on turnover of 180.9 billion yuan.
On the last day before a week-long holiday for National day celebrations, the index extended a recent run-up despite the disappointing PMI result.
"There was some profit-taking going on given that a long holiday is coming and the situation in Hong Kong is still unclear," BOC International analyst Shen Jun told AFP.
Shanghai stocks have enjoyed a rally of late, surging 15 per cent in the past three months as investors view a run of recent downbeat data as a reason for Beijing to introduce stimulus measures.
Coal firms rose in Shanghai on expectations for a government cut in resources tax.
Datong Coal Industry gained 3.52 per cent to 7.36 yuan while Yunnan Coal Energy jumped 2.94 per cent to 12.27 yuan.
Shenzhen-listed Beijing Shiji Information Technology soared 10 per cent to 70.17 yuan after announcing Monday a 2.81 billion yuan investment by Alibaba.