Hong Kong shares may start weaker on Thursday, ahead of a preliminary survey of factory activity in China and the Chinese central bank's second of two weekly open market operations for signs of a shift in its monetary policy.
Chinese short-term money-market rates rose sharply to three-month highs on Wednesday after the People's Bank of China failed to inject cash for a second day and regulators expressed concern about loose liquidity and hinted they are considering taking measures to address inflation risks.
Focus will also turn to the HSBC China flash purchasing managers' index (PMI) due at 0145 GMT, which may offer fresh clues on the state of the world's second-largest economy.
China Unicom, Great Wall Motor and Zijin Mining are among companies due to report quarterly earnings later in the day.
On Wednesday, the Hang Seng Index closed down 1.4 percent at 23,000 points, its lowest close since Oct. 10. The China Enterprises Index of the top Chinese listings in Hong Kong shed 1.8 percent in its biggest daily loss since Aug. 28.
Elsewhere in Asia, Japan's Nikkei was down 0.5 percent, while South Korea's KOSPI was down 0.1 percent at 0050 GMT.
FACTORS TO WATCH:
* Swire Pacific said its unit Hong Kong Aircraft Engineering Co Ltd has agreed to buy a U.S. aircraft technical service firm Timco Aviation Services Inc for $388.8 million, in a deal to be settled in cash and debt-financing.
* Agricultural Bank of China Ltd is considering a bid for Hong Kong-listed Wing Hang Bank Ltd, people familiar with the matter told Reuters, as China's fourth-biggest lender eyes its first acquisition outside its home market.
* Hutchison Whampoa's $1 billion bid for Telefonica's Irish unit is likely to face a lengthy EU antitrust investigation unless Hutchison offers concessions to allay competition concerns, two people familiar with the matter said on Wednesday.
* Top Chinese refiner Sinopec Corp's return to large-volume diesel exports in the fourth quarter will likely continue into the new year, as supply swells with additional refining capacity while demand growth remains weak, industry sources said.