HONG KONG (Nikkei Markets) -- Hong Kong shares edged lower on Friday, as caution prevailed ahead of a holiday-shortened week and a round of Sino-American trade talks.
The Hang Seng Index slipped 0.3% to 25,963.28 by noon. Social media and gaming major Tencent Holdings declined 0.7%, while financial heavyweights China Construction Bank and AIA Group shed 0.8% and 0.5%, respectively.
An ongoing trade spat between the U.S. and China has weighed on risk sentiment for about 18 months, with both nations having imposed several rounds of punitive tariffs on goods imported from each other. A round of high-level U.S.-China trade talks are set to take place on Oct. 10 and 11 in Washington, CNBC reported on Thursday, citing three people close to the talks.
While conciliatory remarks from both countries in recent weeks have sparked some optimism over the outcome of upcoming negotiations, uncertainty remains.
Sentiment is "still driven by uncertainty over the U.S.-China relationship and the trade war," said Daniel So, a strategist at CMB International. "We don't expect a very good, well-rounded trade deal this year, but there may be some tariff concessions announced."
Turnover on the Hong Kong Stock Exchange's main board was at 28.32 billion Hong Kong dollars ($3.61 billion) by the midday break, lower than usual for the time of day. Southbound trading via the electronic trading links with Shanghai and Shenzhen is closed from Friday through Oct. 7. Chinese financial markets are closed all of next week and on Oct. 7 for National Day holidays, while Hong Kong's markets are closed on Oct. 1 and Oct. 7.
"There is a little bit of risk off before the long holiday in China. With no southbound trading, there will be a lack of upward momentum for the Hang Seng Index," So said.
He also expects further downside for the Hong Kong market if there is more violence amid ongoing demonstrations in the city.
Hong Kong Chief Executive Carrie Lam on Thursday held her first town hall-styled meeting with the community, allowing citizens to vent frustrations over the government's management of the city since the protests began.
In the mainland, the Shanghai Composite Index was little changed in the morning session.
Ausnutria Dairy climbed 5.8% in Hong Kong after saying it plans to buy back shares worth up to HK$100 million from time to time. The infant formula maker also said it expects sales for its own-branded formula milk powder to rise more than 30% year-over-year in the September quarter.
China Agri-Products Exchange jumped 9.5% to 6.9 Hong Kong cents after Goal Success Investments, a company controlled by Wai Yuen Tong Medicine Holdings, offered to buy 75% of the company's issued shares at 9.1 Hong Kong cents each. Wai Yuen Tong slipped 3.1%.
Firefighting equipment company CIMC-Tianda Holdings added 0.5% after saying it plans to buy a 60% stake fire-engine manufacturer Albert Ziegler for 245.35 million yuan ($34.4 million).
Engineering services provider FSE Services Group added 2% after reporting a 4.5% increase in net profit for the year ended June 30.
-- Benny Kung