* Shanghai down 1.4 pct; commodities slide spooks investors
* HK steady, up 0.4 pct; Cathay Pacific, Li & Fung rally
* China commodities futures lower amid talk of probe
* 2,700 strong resistance for Shanghai index - analysts
(Updates to close)
By Vikram S Subhedar and Farah Master
HONG KONG/SHANGHAI, Sept 9 (Reuters) - China stocks fell on Thursday after a sudden drop in the commodities futures prompted skittish investors to take money off the table.
Hong Kong's Hang Seng index, where the materials sector has just a 0.5 percent weighting, was unaffected, and gained 0.4 percent.
Chinese commodities futures slid sharply in a widespread selloff that several market participants said was linked to an investigation into the rubber market.
The Shanghai Composite Index fell 1.4 percent to 2,656.4, staying firmly below the 2,700 level that the index has failed to breach multiple times in the past month.
"Commodity futures prices suddenly weakened, which sent the A-shares lower," said Chen Shaodan, analyst at China Development Bank Securities in Beijing.
Metal stocks were broadly lower with Zinc Oxide manufacturer Sichuan Hongda Co Ltd down 3.1 percent and Liuzhou Iron & Steel Co slumping 5.7 percent. Lingyuan Steel plunged 6.3 percent.
Bank of China, which obtained regulatory approval for an $8.8 billion share placement, fell 0.9 percent.
Mainland banking shares have underperformed in recent sessions, reflecting lingering concerns over the health of the sector, with Chinese authorities keeping up pressure on banks to rein in bad loans and tighten lending standards.
Property shares slid 2.4 percent after fresh evidence of Chinese cities preparing more tightening steps, as housing transactions and prices showed signs of a rebound.
The prosperous eastern province of Zhejiang intends to order developers to park pre-sale proceeds from their real estate projects in escrow bank accounts, according to a document obtained by Reuters on Wednesday.
HK HOLDS UP
Hong Kong recovered slightly from Wednesday's retreat, with retailer Li & Fung and Cathay Pacific attracting strong institutional interest and local property plays also finding favour.
The benchmark Hang Seng Index rose 0.4 percent to 21,167.3, finding support at the 23.6 percent retracement of its upmove from the May low to the August peak.
Cathay shares continued their 2010 rally, up 3.7 percent to their highest level in about 22 months on good volume. About 10 million Cathay shares changed hands, about twice the 5-day average.
"There's a been a sharp revival in Chinese airlines and funds are increasingly building positions in Cathay," said Alfred Chan, chief dealer at Cheer Pearl Investments, one of the brokers trading Cathay stock on Thursday.
Cathay shares are up more than 45 percent this year, easily the top performers on the Hang Seng Index.
China Unicom rebounded from Wednesday's slide on reports that Telefonica SA would go ahead with plans to raise its 8.4 percent stake in the company.
Retailer Li & Fung, Thursday's top gainer on the Hang Seng, rose 5.5 percent, bringing its annual gain to nearly 30 percent and taking shares into technically overbought territory for only the second time this year, suggesting a pullback could be near.
Analysts at Citigroup, who rate the stock a "buy", said in a note that new revenue from the company's recent string of acquisitions would help mitigate to some extent uncertainties on overseas demand.
Local property shares received a boost from news that Wharf (Holdings) Ltd, up 1.9 percent, won a bid to buy land in Shanghai for 4.8 billion yuan ($706 million). ($1=6.794 Yuan) (Editing by Muralikumar Anantharaman)