(Updates prices, added major movers and quote)

By Jiaxing Li

HONG KONG, Nov 12(Reuters) - Hong Kong stocks fell to a

three-week low on Tuesday after data showed unexpectedly weak

loan demand in China in October, but mainland shares were

steady, partly aided by a report that China plans to cut taxes

on home purchases.

Hong Kong's benchmark Hang Seng was down 1.7% at

midday, heading for a third straight day of losses. China's

blue-chip CSI300 Index climbed 0.4%, while the

Shanghai Composite Index gave up earlier gains to trade

0.1% lower.

Chinese banks extended 500 billion yuan ($69.5 billion)

in new loans last month, falling sharply from September and

trailing analysts' expectations, according to data released

after the close of market hours on Monday.

"Weak loan growth for both households and corporates

continues to underscore fragile domestic demand," analysts at

Bank of America said in a note.

"The recent pivot in policy stance was a welcoming sign

but more is warranted to stabilize growth going forward," they

added.

The weak reading on credit demand came on top of data

showing the slowest consumer price growth in four months in

October and deepening producer price deflation.

Sentiment in China has remained largely downbeat after

Beijing's dissapointing stimulus package announced on Friday.

But the mood was lifted somewhat by a Bloomberg news report

saying China is preparing to cut home-buying taxes. An index of

China's real estate stocks rose 0.5%.

In Hong Kong, tech stocks led the decline,

with market heavyweight Alibaba ( BABA ) dropping 2.5% and

Meituan losing 5.2%.

The Hang Seng has lost about 13% since its

early-October peak as investors took profit from a

stimulus-triggered rally starting in September, while the CSI300

Index has declined 2.5%.

China's yuan was also under pressure and

weakened

to 3-1/2-month low on Tuesday on worries that U.S.

President-election Donald Trump will impose higher tariffs on

Chinese goods after he takes office in January.