March 27 (Reuters) - China has instructed state-owned

firms to pause new deals with businesses linked to Hong Kong

billionaire Li Ka-shing and his family after his plan to sell

two ports in Panama to a BlackRock ( BLK )-led consortium, Bloomberg

News reported on Thursday.

CK Hutchison ( CKHUF ), the telecoms-to-retail conglomerate

owned by Li, has been caught in China's crosshairs in the highly

politicised deal with the U.S. firm.

The Hong Kong-based company this month agreed to sell most

of its global ports business, including assets near the

strategically important Panama Canal, in a deal that would

garner the firm more than $19 billion in cash.

The directive was issued to state-owned enterprises last

week at the behest of senior officials, Bloomberg reported,

citing people familiar with the matter. Existing tie-ups are not

affected.

The report added Chinese regulators are also reviewing what

investments the family has in China and abroad in a bid to

better understand the breadth of their business dealings.

Shares of CK Hutchison Holdings ( CKHUF ) rose 1.2% by noon, down from

a gain of as much as 3.6% earlier in the day.

Over the past two weeks, pro-Beijing Hong Kong newspaper Ta

Kung Pao has published a series of commentaries criticising the

deal for harming China's national interests and depicting it as

a betrayal of China.

China's Hong Kong and Macau Affairs Office reposted some of

the commentaries on its website, which fuelled speculation

Beijing could take steps to try to scupper the sale.

Chinese regulators, under the instructions of central

leadership, have begun looking into the deal, a source has told

Reuters, a sign of Beijing's discontent with CK Hutchison's ( CKHUF )

divestment under perceived U.S. pressure.

U.S. President Donald Trump has hailed the transaction after

previously calling for the Panama Canal to be removed from what

he deemed to be Chinese control.