(Updates to market close)

By Summer Zhen

HONG KONG, April 28 (Reuters) - China and Hong Kong

stocks fell on Tuesday as the artificial intelligence-led rally

took a breather, leaving investors scouring for fresh catalysts

to sustain the upward momentum.

** By the close, China's blue-chip CSI300 Index

was down 0.3%, while the Shanghai Composite Index traded

0.2% lower.

** Hong Kong's Hang Seng Index lost 0.95%.

** Some AI-related stocks led the losses. In Hong Kong,

large language model upstarts Knowledge Atlas and

Minimax ( MNMXF ) retreated 13% and 4%, respectively.

** Hong Kong-listed Chinese internet majors fell

2.3%. The sub-sector is down more than 12% so far this year.

** In mainland A-shares, cloud computing and

software sectors led the decline, while

semiconductors closed slightly higher.

** Analysts said investors are taking a wait-and-see

approach as they digest a flurry of first-quarter earnings by

Chinese tech companies, as well as taking light positions ahead

of the five-day Labour Day holiday starting on May 1.

** Market focus has shifted from recovery of liquidity to

earnings, Nanhua Futures said in a note.

** "China's AI adoption has yet to lead to meaningful impact

on jobs or earnings," BofA Securities said in a note on Tuesday.

It explains why China's tech rally lags its peers in Asia and

the U.S., they added.

** On the policy front, China's top leadership on Tuesday

indicated that they will keep the market liquidity sufficient as

they reiterated China's "proactive" fiscal stance and

"appropriately loose" monetary policy.

** Also weighing on sentiment is China ordering U.S. tech

major Meta to unwind its acquisition of AI startup

Manus, raising concerns over Beijing's tighter control over

Chinese AI talent and technology.

** Hong Kong shares of electric vehicle battery major CATL

lost 6.9% after the firm completed a share placement

on Tuesday to raise $5 billion. The shares ​were sold at a 7%

discount to Monday's closing price.