* HSI -0.5 pct, H-shares -0.3 pct, CSI300 +0.1 pct
* Rainstorm forces cancellation of morning HK trade
* China power producers slump again, hit by Citi downgrade
* China autos lifted by reported strong May sales, subsidies extension
Hong Kong shares fell further from 3-1/2-month highs on Wednesday and mainland China markets were mixed as Chinese power producers extended losses after a broker downgrade added to fears of lower profit margins.
The dim mood weighed on the Hong Kong debut of Chinese brokerage Galaxy Securities, which ended up 6 percent from its IPO price at HK$5.62 but well off its session high of HK$5.90.
The Hang Seng Index closed down 0.5 percent at 23,261.1 points in its second day of losses after closing on Monday at its highest since early February. The China Enterprises Index of the top Chinese listings in Hong Kong slipped 0.3 percent.
Hong Kong markets only traded in the afternoon after a severe rainstorm forced the cancellation of morning trade.
On the mainland, the CSI300 of the leading Shanghai and Shenzhen A-shares listings edged up 0.1 percent to eke out a 6th straight daily gain, but the Shanghai Composite Index slipped 0.1 percent.
Still, both onshore Chinese indexes have respectively climbed 5 and 3.9 percent since May 13, bouncing off their 50-day moving averages as bourse volumes markedly improved, positive technical signs suggesting more gains are possible.
A further catalyst could come in the form of a preliminary survey of manufacturing activity in the world's second-largest economy. China's HSBC flash manufacturing managers' index (PMI) for May is due on Thursday.
"We could be primed for a rotation from the outperforming sectors such as the small- and mid-cap stocks into relative underperformers," said Zhang Qi, a Shanghai-based analyst with Haitong Securities.
"But any more gains in the short term will depend a lot on money supply conditions and also the resumption of the IPO approvals, which people expect in the third quarter," Zhang added.
The official China Securities Journal reported on Wednesday that Xiao Gang, the country's top securities regulator, said his agency will focus on its key duties of regulating the market and delegate unnecessary duties to other departments gradually.
Guangzhou Auto Group surged the maximum allowed 10 percent in Shanghai and 7.4 percent in Hong Kong after Chinese media reported that subsidies for clean energy vehicles may be extended for three years.
The official China Securities Journal further reported the Passenger Car Association as saying that sales in May could increase 14 percent from a year earlier, maintaining a blistering start to the year.
Chinese property developers were again strong ahead of a national urbanisation strategy meeting which the 21st Century Business Herald reported on Tuesday will likely be held by early June.
China Vanke gained 0.6 percent to stretch gains on the year to almost 20 percent, compared to the 3.8 percent rise for the CSI300.
POWER PRODUCERS SLIDE AGAIN
But Chinese independent power producers were again the standout underperformers. Huaneng Power tumbled 8.3 percent to its lowest closing level since March 31 in Hong Kong. Its Shanghai listing slid 5.8 percent.
It has dived almost 18 percent this week in Hong Kong on concerns that planned curbs on lower quality coal imports and lower tariffs could hurt its margins.
On Wednesday, Citi analysts downgraded their view on Huaneng's H-share listing from "buy" to "neutral," assuming a 2 percent tariff cut for coal-fired power plants in the third quarter could help reduce net profit by 7 percent in 2013 and 13 percent in 2014.