(Updates to midday)
HONG KONG, July 8 (Reuters) - Chinese bank stocks led the pullback on both the Hong Kong and the Shanghai markets on Wednesday as investors worried that China may backtrack on its easy monetary policies following a strong surge in new lending in the first half.
Senior regulators in China on Tuesday warned that the country's massive infrastructure lending was posing increasing risks for the banking system.
Bill and bond yields had been rising recently on signs that the central bank was starting to tighten its liquidity policy, with worries over a possible policy shift also weighing on the stock market, analysts in Shanghai said.
In Hong Kong, China Construction Bank led losses, dropping 2.6 percent to HK$5.58, while in Shanghai the country's biggest lender, Industrial & Commercial Bank of China fell 4.42 percent to 5.19 yuan.
China Merchants Bank dropped 2.4 percent in Hong Kong and 3.9 percent in Shanghai. China's sixth-largest lender is planning a rights share offer to raise about $3 billion before year-end, as it seeks to boost its capital after overpaying for a recent acquisition, investment banking sources told Reuters on Wednseday.
Here are the index moves and major stocks on the move in both markets my midday-
HONG KONG
* The benchmark Hang Seng Index was down 1.7 percent at 17,560.97, heading for a third straight day of losses as talk circulated about the need for a second round of stimulus spending in the United States, stoking fears the economy was not yet on the road to recovery.
* The China Enterprises Index, which represents top locally listed mainland Chinese stocks, fell 2 percent to 10,464.07.
* China's largest shipping conglomerate China Cosco slid 5.1 percent after the dry bulk shipping gauge fell for a fifth straight session on worries that demand to ship iron is slowing. Another bulk carrier, China Shipping Development, sank 4.7 percent to HK$9.24.
The Baltic Dry Index which measures changes in the cost of shipping key commodities fell 4.7 percent overnight.
* Chinese property stocks pulled back on worries that a clampdown on lending for second-home buyers in Hangzhou, aimed at cooling the property market, may spread to other major cities.
Banks in Hangzhou are required to strictly apply a 40 percent, up from 20 percent, down-payment rule for second home purchases after property prices in Hangzhou rose 20 percent over the past three months, Chinese newspapers reported.
* China Overseas Land fell 5.9 percent, while Shimao Property gave up 7.7 percent. But analysts viewed the move as a temporary setback for the property sector.
"The new move might affect volume growth but at a moderate rate. Second or multiple homebuyers will continue to view property purchase as a way to hedge against inflation risks amid low interest rates," said Carol Wu, analyst with DBS Vickers.
* Energy stocks continued to correct as oil fell towards $62 per barrel on Wednesday, on course for its sixth consecutive fall and the longest losing streak since mid-December, after data showed larger-than-expected builds in U.S. products stocks, reflecting little sign of a recovery in oil demand.
Asia's largest oil and gas producer PetroChina was down 2.6 percent, while offshore oil specialist CNOOC shed 1.6 percent.
SHANGHAI
* The Shanghai Composite Index ended the morning down 2.17 percent at 3,022.275 points, extending Tuesday's 1.13 percent fall, as bank shares dived.
* Losing Shanghai A shares outnumbered gainers by 711 to 198, while turnover in Shanghai A shares dropped to 85.9 billion yuan ($12.6 billion) from Tuesday morning's 96.7 billion yuan.
* Domestic media, including the International Finance News, on Wednesday reported that the China Securities Regulatory Commission was carrying out checks on details of mutual fund trades and sales.
* Analysts said the checks were linked to news that Beijing-based China Asset Management Co, the country's biggest fund firm, had reported strong demand for a new index fund. The fund had already attracted over 10 billion yuan on Monday on its first day of subscriptions.
* "Hot fund sales seem to recall 2007's bull run. Concerns over recent large rises in the index, plus weak overseas markets, triggered profit-taking," said Haitong Securities analyst Zhang Qi.
* The property sector was also weak, with Vanke sinking 1.77 percent to 13.84 yuan.
* Coal shares were hit after recent lower oil prices. China Shenhua Energy lost 1.61 percent to 32.30 yuan after sliding 2 percent on Tuesday.
The most heavily-weighted stock on the index, PetroChina, dropped 2.56 percent to 14.44 yuan after losing 2.2 percent on Tuesday. U.S. crude futures extended drop towards $62 per barrel on Wednesday. (Reporting by Parvathy Ullatil in HONG KONG and Claire Zhang in SHANGHAI; Editing by Ben Blanchard and Chris Lewis)