* China, HK shares fall on concern over higher interest rates
* Wynn Macau slumps on downbeat outlook of parent
* Air China advances after returning to profit (Updates to midday)
By Jun Ebias and Claire Zhang
HONG KONG/SHANGHAI, Oct 28 (Reuters) - Shares in Hong Kong and China fell on Wednesday, as property counters eased on concern about a possible shift toward a tighter monetary policy by Beijing as the economic recovery gains momentum.
The benchmark Hang Seng Index fell 1.66 percent or 368.64 points to 21,800.95 on Wednesday morning. Turnover was HK$40.00 billion ($5.2 billion), versus midday Tuesday's HK$42.84 billion.
"The Hong Kong stock market is running out of steam and that's encouraging investors to take profit," said Andy Lam, a strategist at Harris Fraser (International). "From last week, we do see the market getting a bit overbought."
Hong Kong stocks rallied to their highest in 14 months on Friday.
Wynn Macau tumbled 8.26 percent after its parent, Wynn Resorts, gave a downbeat outlook, causing its share to drop 10 percent in the United States.
Aluminum Corp of China was down 2.55 percent. The aluminium maker returned to profit in July-September after three quarterly losses, but its net profit of 21.27 million yuan ($3.11 million) in the third quarter was down 88 percent from a restated profit a year earlier.
China Shipping Container Lines fell 2.97 percent. The company posted a 1.94 billion yuan ($284.1 million) loss for the third quarter ended September.
ZTE Corp slumped 3.85 percent. China's No.2 telecommunications equipment maker posted a 58.2 percent rise in profit, beating a consensus forecast, as domestic providers build new 3G networks.
The China Enterprise Index of top locally listed mainland Chinese stocks was down 2.04 percent at 12,876.84.
Bucking the downward trend, mainland airlines gained after posting profits in the third quarter.
Air China rose 1.16 percent, after the mainland carrier's earnings returned to the black in the third quarter, with a boost from fuel-hedging gains and a strong rebound in domestic air travel.
China Southern Air advanced 1.67 percent.
Ping An Insurance declined 2.45 percent. The mainland insurer returned to a quarterly profit in July-September but warned that low interest rates and stock volatility could weigh on profit in the final quarter.
Hong Kong developers extended their declines on concerns the government may impose more measures to curb a faster climb in property prices.
New World Development fell 4.45 percent and Sino Land <0083.HK> was 4.12 percent lower.
The Hong Kong Monetary Authority on Friday said it would implement measures to slow a surge in luxury property prices, including capping mortgage loan values.
China Shenhua Energy shed 2.06 percent, even after reporting a 12 percent rise in profit. In Shanghai, China Shenhua, the world's most valuable coal producer, slipped 0.52 percent to 34.61 yuan.
SHANGHAI SLIPS
The Shanghai Composite Index ended Wednesday morning at 2,988.952 points, after posting its biggest one-day loss in five weeks on Tuesday.
Losing Shanghai A shares outnumbered gainers by 636 to 239, while turnover shrank to 60 billion yuan ($8.8 billion) from Tuesday morning's 70 billion yuan.
The market is also eyeing the pending start of trade this Friday on ChiNext, a Nasdaq-style second board for start-ups, where an initial 28 companies are to debut in the first batch.
"The index may fluctuate around the key 3,000-point level in the short term, with some money maybe looking at Friday's listing of start-up shares, but economic recovery is on track and this may offer support," said Chen Jinren, senior analyst at Huatai Securities in Jiangsu.
The official China Securities Journal cited the Beijing-based Unirule Institute of Economics as saying that China's economy would grow by 8.2 percent in 2009, while the CPI would fall 0.1 percent for the same period.
But the improving economic outlook has also left investors wary about a gradual exit from the government's loose monetary policy.
Property sector heavyweight China Vanke was down 2.34 percent at 11.70 yuan, while Wuhan Steel lost 2.82 percent to 7.24 yuan. (Editing by Chris Lewis)