Hong Kong shares dropped 1.5 percent on Friday, as analysts predicted the end of a short-lived global rally after disappointing US home sales data rekindled worries over the health of financial markets. But the main index rose 4 percent over the week, posting its best weekly gain in three months, rallying in line with a rebound in global financial stocks.
Energy stocks took a beating on a raft of news including more rigid price controls, profit warnings and easing oil prices. China Shenhua Energy fell 6.7 percent, adding to Thursday's 4.9 percent fall, after Beijing announced stricter price controls on thermal coal used by power plants.
Shares in Datang International Power, China's second-largest listed electricity provider, tumbled 5.9 percent after it estimated first-half net profit fell more than 70 percent due to a sharp rise in coal prices.
Asia's largest oil and gas company, PetroChina, dropped over 3 percent while offshore oil producer CNOOC, which is an upstream pure play, gave up 3.6 percent. The Hang Seng Index closed 347.01 points lower at 22,740, almost unchanged from its opening level. The index dropped to 22,542.08 earlier.
The index has gained more than 9 percent, from its lowest close in four months on July 15, cheered by the US government's rescue plan for the housing sector and better-than-expected earnings from major banks. Mainboard turnover fell to HK$61.39 billion ($7.9 billion) from HK$77.25 billion on Thursday.
Index heavyweight HSBC Holdings, the most actively traded stock of the morning, slipped 1 percent while China Mobile led losses on the main index with a 2.3 percent drop. Bourse operator Hong Kong Exchanges & Clearing which scaled a five-week high on Thursday, gave up 3.2 percent as investors jumped in to lock in gains after the overnight slump on Wall Street.
China Coal Energy, the nation's second largest coal miner, lost 3.5 percent while smaller rival Yanzhou Coal dropped 6 percent. Huaneng Power International fell 7.5 percent. China's top independent power producer said earlier this month it may have made a loss in the January-June period, also because of higher coal prices.
China Communications Construction was down 4.7 percent, after tumbling more than 7 percent earlier, following a Citigroup downgrade on the stock to hold from buy on the recent sharp share price rally. Shares in the mainland's top builder of highways and ports has rallied nearly 16 percent since the beginning of July. Chinese financials slumped, trailing losses on the Shanghai bourse. China's top lender ICBC fell 1.2 percent while China Construction Bank slipped 1 percent.