* Shanghai Composite Index down 0.6 pct; banks, property weak
* Hong Kong shares little changed in tepid turnover
* Gold miners buck downtrend in Shanghai, rise on gold prices (Updates to midday)
By Vikram S Subhedar and Farah Master
HONG KONG/SHANGHAI, Sept 15 (Reuters) - China shares eased on Wednesday morning, backing away from a key resistance level again, with investors continuing to shy away from large cap bank and property issues.
The Shanghai Composite Index was down 0.6 percent at 2,673.1 by midday with profit-taking seen in small- and mid-cap stocks that have outperformed in recent weeks.
Sentiment has weakened after the index failed to breach the 2,700 level for the seventh time in the past month.
While analysts say a rise in interest rates is off the cards in the short term, investors were staying away from heavily-weighted banks and real estate plays on caution over further policy moves to cool the property market.
Cheng Yi, an analyst at Xiangcai Securities, said the broader index was unable to gain without the support of large caps and cautioned that recent rises in small- and mid-sized companies may also shrink as investor appetite fades.
Bank of China Ltd slipped 0.6 percent, while Industrial and Commercial Bank of China Ltd (ICBC) fell 0.3 percent.
The steeper slide in mainland shares compared with Hong Kong-listed counterparts this year has pushed them deeper into discount territory versus Hong Kong's H-shares, reversing a multi-year trend.
"Looking at the A/H share premium, particularly at banks, most Hong Kong investors are focusing on valuations whereas here domestic investors look at short-term speculative moves, so there is a different trend," Cheng said.
Airlines continued to outperform the broader market for a second day, boosted by prospects for a stronger yuan, as they buy aircraft in foreign currency. China Southern Airlines Co Ltd gained 2 percent.
Also bucking the trend, gold miners rose helped by the biggest one-day gain in four months for spot gold.
Zhongjin Gold Corp Ltd rose 1.6 percent while Shandong Gold-Mining Co Ltd rose 2.4 percent.
HK LITTLE CHANGED, VOLUME LOW
Hong Kong shares were slightly firmer by the midday break, with turnover falling back to subdued levels seen earlier this quarter.
The benchmark Hang Seng Index pulled back from resistance at last month's high around 21,800 after having retraced its entire drop from the Aug. 9 high to Aug. 31 low.
The index is up 6.5 percent this month, accompanied by rising turnover, as strong economic data from China and the U.S. prompted investors to put money back into the market.
That rally paused on Wednesday with the index running into resistance at the August high and as a lacklustre performance on Wall Street on Tuesday kept gains in check.
"Markets look to be running out of steam with the Dow and the S&P finding it hard to break through their 200-day moving averages despite positive retail sales, Best Buy beating forecasts and Cisco paying its first ever dividend," said traders at Standard Chartered in a note to clients.
With light moves in large-cap shares on the day, HSBC Holdings Plc, which has a 15 percent weighting on the index, slipped 0.2 percent but was the biggest drag on the index.
Foxconn International Holdings Ltd extended Tuesday's gains, up 2 percent, on optimism that major customer Nokia's new smartphone strategy would benefit the beleaguered contract cell phone maker. (Editing by Chris Lewis)