* Hang Seng down 2 pct; Shanghai off 0.5 percent
* Losses accelerate after Moody's puts Spain on review
* Oil counters weigh as crude slips; Petrochina down 3.6 pct
* Cathay Pacific tumbles most in 20 months after Nov data (Updates to close)
By Vikram S.Subhedar and Farah Master
HONG KONG/SHANGHAI, Dec 15 (Reuters) - China and Hong Kong shares fell on Wednesday with losses from profit-taking accelerating after Moody's warned it may downgrade Spain's debt.
Hong Kong's Hang Seng slid 2 percent, wiping out all of its weekly gains, although the decline came on still tepid turnover and was led mostly by a selloff in oil counters and heavily-weighted mainland banking shares.
"It looks like some funds are winding back and cutting risk going into year end. We've definitely seen the quantity of fund inflows decrease from say a couple of months ago," said Ben Kwong, chief operating officer at KGI Asia in Hong Kong.
Giving investors another excuse to book profits made so far this year, ratings agency Moody's said it had put Spain on review for a possible downgrade because of its high funding needs and doubts about its banking sector and regional finances. [ID:nL3E6NF0D8]
The drop in the Hang Seng coincided with a weakening of the Hong Kong dollar , suggesting some capital may be flowing out of Hong Kong as funds close books for the year.
Hong Kong was a key beneficiary of surging inflows into Asian markets in the second half of 2010. Asset purchases by central banks in the developed world kept interest rates low and a robust Chinese economy attracted investors.
Cathay Pacific Airways Ltd , the top performer among large caps in Hong Kong this year with gains of more than 54 percent, fell 6.1 percent.
Airlines are amongst the worst performers this month after some investors saw China's plans to develop a high-speed rail network hitting profits and as the sector's fast rebound after the financial crisis plateaus.
Royal Bank of Scotland analyst Andrew Orchard in Hong Kong said that a year-on-year declines in load factors on most of Cathay Pacific's routes last month may be a sign the airline added too much capacity last year as traffic was recovering.
Oil major Petrochina fell 3.6 percent and Sinopec was down 3 percent as crude prices eased to $87.90 with charts pointing to further losses a cautious U.S. Federal Reserve dampened expectations for a faster recovery. [ID:nTLAENE627]
SHANGHAI SLIPS, VOLUMES LOW
China's key stock index closed down 0.5 percent on low volume as profit-taking hit railway stocks, which had enjoyed a rally on government spending plans.
Fears about the availability of cash in the stock market hampered also weighed on prices for the second consecutive day.
China's benchmark short-term money market rate , the main barometer of short-term liquidity supply, jumped to a 2-year high as banks prepared funds to meet a hike in reserve requirements. [ID:nTOE6BE038]
The Shanghai Composite Index fell to 2,911.4.
Its 250-day moving average, now at 2,862 points, should provide strong support for the index and analysts are optimistic about the prospects heading into 2011 as strong earnings and reasonable valuations underpin the market.
"The index will have no trouble in passing 3,000 points in the near term. Despite tightening pressures we are in a new round of upward gains," said Ren Chengde, analyst at Galaxy Securities in Shanghai.
On the day, however, speculative retail investors were seen cashing in profits from insurers such as China life Insurance and Ping An Insurance , which fell 1.5 percent and 2.4 percent respectively.
Consumption-related new listing still found favour food distributor Yonghui Stores jumping 34.7 percent on its trading debut.
Financials were among the biggest drags on the index with Industrial and Commercial Bank of China 1.7 percent lower.
China's central bank has told six of the country's biggest lenders that a special increase in required reserves will be extended, the latest attempt to quell inflation. [ID:nLDE6BC0ET]
Turnover of Shanghai A shares dropped to 143 billion yuan from 152 billion yuan on Tuesday.
(Editing by Kazunori Takada)
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