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CSI300 up 4%, Shanghai Composite up 3.2%

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Hang Seng -7.7% as traders take profits

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Yuan down, bond futures bounce from lows

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Traders see test ahead in coming sessions

(Updates prices to 0540 GMT)

SHANGHAI, Oct 8 (Reuters) - China's runaway stocks rally

began losing steam on Tuesday and Hong Kong shares slumped as

officials disappointed markets by providing few specific details

on plans to bolster China's slowing economy.

Mainland markets roared back from a week-long break, hitting

two-year peaks with turnover surging past a trillion yuan inside

the first 20 minutes of trade. But the benchmarks were soon off

their highs and proxies for Chinese growth slipped across Asia

as the stimulus-backed buying frenzy showed signs of cooling.

The Shanghai Composite was up 3.1% in afternoon

trade and the blue-chip CSI300 rose 4%, having

earlier surged as much as 10.1% and 10.8% respectively. Hong

Kong's Hang Seng, catapulted to be the top-performing

major market this year aided by blistering gains in recent

sessions, slid 7.7%.

The Australian dollar fell 0.4% and the yuan

headed for its sharpest drop in a year. Iron ore and

other industrial metal prices - which are sensitive to China's

economic outlook - wobbled lower from morning highs.

European futures fell 0.8%.

Economic planner chairman Zheng Shanjie told reporters that

China was "fully confident" of achieving economic targets and

will pull forward 200 billion yuan from next year's budget to

spend on investment projects and support local governments.

"Markets were hoping to obtain some guidance on the size of

fiscal stimulus," said Eastspring Investments' portfolio manager

Rong Ren in Singapore, but found little new in Zheng's remarks.

"It is likely we see markets consolidating and digesting

what has already been announced, which arguably is meaningful,

but not quite enough to satiate lofty expectations."

The biggest gainers were tech hardware makers, brokers,

health care companies and builders - all seen likely to get

their share of support as the government seeks to boost an

economy that has struggled to recover amid a loss of confidence

in the wake of a protracted property crisis.

The CSI semiconductor sub-index surged 16.4%

and a sub-index of brokers was up 10.6%. Thematic

indexes from biotechnology to defence

and electric vehicles rose more than 10%.

In Hong Kong, however, mainland property developers

fell 11%, which if sustained would make for one of its largest

percentage declines in years, though analysts said technical

reasons were probably behind the selling.

"There may be a bit of a profit taking," said Natixis' Gary

Ng. "I don't think the sentiment is that different. It's really

about one market being closed for many days, and the other one

has been trading."

The yuan fell sharply to 7.0502 per dollar and

five-year bond futures dropped to their lowest since

July before rebounding following Zheng's news conference.

GROWTH GOALS

Before the Golden Week break, China announced the most

aggressive stimulus measures since the pandemic and the CSI300

gained 25% over five sessions. Last Monday the CSI300 and the

Shanghai Composite both notched their largest gains since 2008.

The central bank announced cheap loans for buybacks and a

swap program to allow institutional investors to access cash for

buying shares. Beijing Balance Medical Technology

said on Tuesday its controlling shareholder Jin Lei plans to tap

such loans to lift his stake, making it one of the first firms

to use the facility. The stock was up 20%.

Beijing has stopped publishing timely investor flow data,

but foreign selling in Indian shares last week hinted global

investors may be preparing to increase their exposure to China.

For now signs of caution and anxiety were creeping back on

Tuesday even as markets strode ahead.

Regulators urged financial institutions to strengthen

controls over leverage, and prevent bank loans from illegally

entering the stock market, a newspaper affiliated to China's

central bank said on Tuesday. At least one fund manager was

restricting subscriptions to guard against massive inflows.

"The next window to look for potential a fiscal expansion

update would be the Ministry of Finance press conference &

National People's Congress meeting later this month," UBS

analysts said in a note to clients.