Hong Kong stocks closed lower on Friday, as market sentiment soured on news that the United States is set to add dozens of Chinese companies to a trade blacklist, ramping up tensions between Washington and Beijing.

Sources told Reuters that the move, which has not previously been reported, is seen as the latest in President Donald Trump's effort to cement his tough-on-China legacy.

It comes just weeks before Democratic President-elect Joe Biden is set to take office on Jan. 20.

Washington is also expected to add China's top chipmaker SMIC to the blacklist. In total, the United States is expected to add around 80 additional companies and affiliates to the so-called entity list, nearly all of them Chinese.

At the close of trade, the Hang Seng index was down 179.78 points or 0.67pc at 26,498.60.

The Hang Seng China Enterprises index fell 0.59pc to 10,483.34.

The sub-index of the Hang Seng tracking energy shares rose 1.9pc, while the IT sector dropped 1.14pc, the financial sector ended 1.05pc lower and the property sector dipped 0.33pc.

The three biggest H-shares percentage decliners were Semiconductor Manufacturing International Corp, which was down 5.2pc, CSPC Pharmaceutical Group Ltd, which fell 3.09pc and Haidilao International Holding Ltd, which closed 2.56pc lower.

China's main Shanghai Composite index closed 0.29pc weaker at 3,394.90 points, while the blue-chip CSI300 index ended 0.35pc lower.

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.66pc, while Japan's Nikkei index closed down 0.16pc.