* Hang Seng ends day flat, down 1.6 pct on week
* HK developers feel pinch of tighter lending conditions
* China stocks edge up to 5-mth high, outperform Asia
* Steel makers slump as share prices catch up with downgrades (Updates to close)
By Vikram Subhedar and Yixin Chen
HONG KONG, April 15 (Reuters) - Hong Hong shares posted their first weekly loss in a month on Friday, pressured by profit taking in energy- and property-related stocks whose weakness could spillover to next week as lending conditions in the territory tighten up.
A sharp rise in short selling of the main China-related exchange traded fund listed in Hong Kong as well as a drop in turnover to 12 percent below the daily average over the past month reflected the sense of caution among investors.
Hong Kong's benchmark Hang Seng index ended flat on the day but down 1.6 percent for the week, ending a streak of three successive weekly gains as property counters were hit by rising mortgage rates and energy plays suffered as oil prices came off recent peaks.
Short-selling as a percentage of total turnover on the iShares China ETF hit 35.4 percent by midday on Friday, more than double the average seen over the prior five days, according to data from the stock exchange.
Developers' shares, which rose 15 percent in the previous three weeks, have taken a hit in Hong Kong after local authorities took steps to curb lending and HSBC raised its interest rates on new mortgages for a second time in a month.
Investors' negative views on Hong Kong property developers echoed the outlook for the mainland Chinese real estate industry.
On Thursday, Moody's Investors Service downgraded its outlook for China's property sector to negative from stable on concerns about deteriorating credit conditions for developers over the next 12 to 18 months. [ID:nL3E7FE0T1]
"Moody's negative comments on the Chinese property sector and HSBC raising the HIBOR-based mortgage rate for new customers may affect short-term market sentiment on Chinese and Hong Kong property stocks," said Alan Lam, greater China analyst at Julius Baer.
While cheap valuations and a move of funds away from physical real estate into property stocks was helping developers' shares in Shanghai, investors in Hong Kong were more wary of earnings multiples that have become less attractive in a short period of time.
The forward 12-month earnings multiple of industry bellwether Sun Hung Kai Properties rose to 17.1 times compared with 15.8 times at the end of March and above the 10-year median of 16.8 times, Thomson Reuters Starmine showed.
A sub-index of property shares listed Hong Kong fell 1.8 percent over the past week, underperforming the Hang Seng index.
Energy counters were the main underforming sector, though most of the losses were incurred in the first half of the week as crude oil prices retreated from recent peaks.
Sinopec , China's largest refiner, continued to remain weak, down 0.8 percent on Friday.
CHINA EDGES UP, DEVELOPERS SHINE
In contrast to Hong Kong, developers in Shanghai rose, helping China's main stock index post slim gains on the day as well as the week as the market continued to outperform other Asian markets.
The Shanghai Composite closed up 0.3 percent on Friday at a new five-month high. However, stubbornly high inflation kept investors wary that authorities could announce further policy tightening steps soon.
Consumer price inflation (CPI) in March sped to 5.4 percent from a year earlier, the fastest since July 2008 and topped market forecasts for a 5.2 percent increase, while China's gross domestic product (GDP) increased by 9.7 percent in the first quarter. [ID:nL3E7FF06Z]
"Property shares already attracted a lot of funds over the last several weeks due to good earnings results or sales data," said Zhang Qi, analyst at Halting Securities in Shanghai. ."
The mainland's property sub-index rose 2.4 percent on Friday, and shares of China Vanke , the mainland's biggest developer, rose 1.1 percent.
Steelmakers were big underperformers on the day as share prices looked to catch up with sharp downward revisions in earnings expectations for the sector seen over the past fortnight.
Angang Steel Co which warned that its first-quarter profit would plunge by 94 percent due to sharply higher prices for raw materials and fuel, dropped 5.3 percent in Hong Kong and 2.6 percent in Shenzen. [ID:nL3E7FF092]
According to Starmine, eight analysts had cut their December 2011 earnings forecasts for the company by an average of 12.7 percent since March 30, although shares had risen 11 percent over the period before Friday's slump on expectations that demand from Japan would support prices.
Most of all 48 steel companies listed on the Shanghai and Shenzhen market fell, while Guangzhou Iron And Steel , dropped 2.4 percent and Baoshan Iron & Steel Co Ltd , China's biggest-listed steelmaker, fell 1.4 percent.
(Editing by Kevin Plumberg)