* Hang Seng index set for 2nd weekly loss as April gains fade
* Shanghai Composite little changed, set for worst wk in 2011
* Defensive utility stocks outperform, Power Assets up 1 pct
* Banks see profit-taking after results, Hua Xin slumps on debut (Updates to midday)
By Vikram Subhedar and Yixin Chen
HONG KONG/SHANGHAI, April 29 (Reuters) - Hong Kong shares continued their weak streak on Friday and are poised for a weekly loss that would see most of this month's gains disappear, pressured by weak mainland markets and a sluggish property sector.
The Hang Seng index fell 0.5 percent to 23,682.8 by the midday trading break, with strong first-quarter earnings from Chinese banks doing little to lift it out of its downward trend. Support for the index is around the month's low at 23,470.
The Shanghai Composite has slid almost 4 percent this week over fears that Beijing would unveil policy measures over the upcoming long weekend aimed at cooling property prices.
"Investors are not willing to put funds into the market," said Zhang Qi, analyst at Haitong Securities in Shanghai. "And the earnings season will finish soon, so the market needs to find other news for support."
China's central bank has often announced major policy changes just before or during holidays. Markets in China and Hong Kong will reopen on Tuesday after the May Day holiday.
Banking shares, expected to lift the market after banks posted bumper first-quarter earnings, were hit by profit-taking with all four major lenders lower on the day.
The year's top performing large-cap bank stock, Agricultural Bank of China , retreated 3.6 percent. AgBank shares have risen 17 percent this year compared with a 3 percent gain for the financial sub-index and a 2.8 percent rise on the Hang Seng index.
Rival Industrial & Commercial Bank of China shares fell 1.1 percent while Bank of China slipped 1.2 percent.
Hikes in Chinese interest rates have helped banks' net interest margins, driving strong results, but capital requirements are now seen as one significant risk for investors. [ID:nL3E7FS29B]
STEEL PLAYS UP IN SHANGHAI
The benchmark Shanghai Composite Index was at 2,890.3 points, recovering slightly after Thursday's 1.3 percent drop. Turnover on Shanghai A-shares dropped to 50 billion yuan ($7.7 billion), versus Thursday's 58 billion yuan at midday.
Steel makers outperformed after China Iron & Steel Association (CISA) said steel demand was expected to rise from 2011 to 2015. [ID:nL3E7FT03U]
Almost all steelmakers listed on the Shanghai and Shenzhen markets rose, with Henan Hengxing Science & Technology jumping 3.2 percent and Wuhan Iron and Steel rising 1.6 percent.
Property companies also rebounded, with real estate firm Fujian Start Group jumping its 10 percent daily limit and China Vanke , the largest developer in sales, rose 1.7 percent.
Property remained on the backfoot in Hong Kong, however, after the Hong Kong Monetary Authority once again issued a warning to local banks on excessive lending. [ID:nL3E7FS383]
Ultra-low interest rates, abundant liquidity and strong demand for Hong Kong property from mainland buyers have lifted property prices to near-record levels and spurred lending.
But a warning from the HKMA's chief that interest rates in Hong Kong could rise before the United States are seen as a further sign that authorities are looking to keep a lid on property prices and lending.
The property sub-index fell 0.5 percent and is down 2.5 percent this month, the worst performing sector in April.
Hong Kong's first yuan-denominated IPO tumbled 7.8 percent on its Friday debut as investors turned their noses up at the low yields offered by billionaire Li Ka-shing's Hui Xian real estate investment trust. [ID:nL3E7FT03X]
On the flipside, utilities have seen steady buying as investors grew more defensive with markets coming off their year highs.
Power Assets , previously called HongKong Electric Holdings, rose 1 percent and was the top performer on the day. The utilities sub-index is up 2 percent this month. (Editing by Jonathan Hopfner)