Hong Kong, China Shares Weaken; Li & Fung Sinks

* HSI slips 0.3 pct, CSI300 down 0.5 pct

* GS, CS cut China forecasts

* Consumer stocks up on report of plan to boost retail sales

* Kweichow Moutai spikes after announcing price increase

Hong Kong and China shares slipped on Tuesday in very thin trade, declining for a fourth day out of five, as investors continued to move out of stocks with underwhelming earnings and grim outlooks.

Adding to the gloom were more downbeat client notes from top brokerages, with Goldman Sachs analysts saying they expect the earnings slowdown to spill over into next year while Credit Suisse scaled back expectations for the China Enterprises index and cutting its rating on the banking sector.

This past earnings season has highlighted shrinking margins, rising inventories and higher financing costs for many Chinese firms.

"Earnings were actually slightly better-than-expected, but everybody's still very cautious with so much uncertainty about the Chinese economy," said Alex Wong, Ample Finance's director of asset management.

"But even then, it's tough to make any substantial positional changes because there are so few counterparties in the market with turnover so low," Wong added.

The China Enterprises Index of the top Chinese listings in Hong Kong shed 0.7 percent, while the Hang Seng Index inched down 0.3 percent as midday bourse turnover declined 22 percent from Monday.

The CSI300 Index of the top Shanghai and Shenzhen listings was down 0.5 percent, while the Shanghai Composite Index slipped 0.4 percent with midday bourse volume near 2012 lows.

Shares of Li & Fung, the global supply chain manager for U.S. retail giants Walmart and Target , fell 2.8 percent to their lowest intra-day level since October last year.

It has lost more than 25 percent since posting weak first-half operating profits on Aug. 9 that triggered a slew of broker downgrades on fears of sluggish demand from the United States, Europe and China.

Sany Heavy Industry sank 4 percent to its lowest since Oct. 2010. The Chinese excavator maker missed forecasts with a 28 percent fall in second-quarter net profit late last week, as the country's slowing economy led to a jump in unpaid bills.

But losses in mainland markets on Tuesday were limited by strong gains for the shares of premium liquor producer Kweichow Moutai, which said on Tuesday it will raise prices on some of its products by as much as 30 percent from the start of September.

Moutai jumped more than 6 percent to its highest in almost two weeks and it is now up 22 percent this year, a rare bright spot in a market that could post a third-straight year of losses. The CSI300 Index is now down 5.5 percent in 2012.

Other consumer-driven stocks saw some strength after state-run Shanghai Securities News reported that Beijing is targetting an 80 percent rise in retail sales from current levels by 2015 in the country's first five-year plan for domestic trade.

Shares of Suning Appliance, China's home appliance retail chain operator, jumped 4.6 percent in Shenzhen.

The reported move to encourage consumer spending in China would be one of several policy tweaks after two complementary surveys released over the last three days showed China's manufacturing sector has been badly hit by slowing new orders.

More data is expected this Sunday, when Beijing will release August data for inflation, industrial output, urban investment and retail sales.

In a report on Tuesday, Goldman Sachs also cut its forecasts for 2013 earnings growth for the MSCI China by 30 percent to bring it more in line with the broader market consensus.

Credit Suisse cut its 12-month target for the China Enterprises index by 8 percent to 12,000, although that is still a jump of nearly 30 percent from current levels. Its rating on the banking sector was cut to "marketweight" from "overweight".

Chinese shares in Hong Kong currently trade at 6.7 times forward 12-month earnings well below its five-year average of 10.7 times, according to Thomson Reuters I/B/E/S.