* Shanghai shares fall 1.3 percent to near three-month low
* Hong Kong down 0.9 percent as banks, properties fall
* Kunlun rises after $2.9 bln acquisition, Luk Fook climbs (Updates to midday)
By Donny Kwok and Samuel Shen
HONG KONG/SHANGHAI, Dec 28 (Reuters) - Shanghai stocks slid on Tuesday morning, extending the previous session's nearly 2 percent drop, as a surprise interest rate rise over the weekend reignited policy tightening fears in a market already suffering from year-end liquidity tightness.
The benchmark Shanghai Composite Index was down 1.3 percent by midday at 2,744.4 points, touching the lowest level in nearly three months, with financials and property issues leading the decline.
The Shanghai Composite Index fell squarely below the 250-day moving average, a key technical point, lending support to some pessimistic views that the market is likely to fall further.
"The market is likely to fall further as there's already an acute shortage of liquidity in the financial system, but the surprise rate rise has made the situation worse," said Tebon Securities Co strategist Zhang Fan.
"But after investors digest the negative news, the market may stabilise and will likely rally in the first half of next year," he said, adding that the market may find its bottom at around 2,700 points.
China's central bank unexpectedly raised the benchmark interest rate by 25 basis points on Saturday, the second increase in just two months, triggering fears of further tightening.
In an apparent effort to sooth investor concerns, central bank adviser Li Daokui said China would tighten fiscal policy gradually in a manner "acceptable to the market", local media reported on Tuesday.
But expectations that China will front-load more tightening measures in the first half of next year continued to weigh on a thinly-traded market already suffering from a seasonal liquidity shortage.
Small-cap stocks, which have been the subject of much speculation recently with regard to government support for sectors such as new energy and technology, fell sharply, with some down more than 4 percent.
Developers continued to slide on concern that monetary tightening and real estate curbs would hurt sales and slash margins.
Shenzhen-listed China Vanke Co Ltd, the country's biggest listed developer, lost 0.7 percent, while major rival China Merchants Property Development Co Ltd slumped 3.4 percent.
Banks also weighed as the prospect of a slowing economy triggered concern that loan demand will fall and bad loans will rise.
China Construction Bank Corp, the country's biggest mortgage lender, dropped 0.7 percent while Agricultural Bank of China Ltd fell 0.8 percent.
BANKS, PROPERTY, AUTOs WEIGH IN HK
Banks and property counters led the slide in Hong Kong, sending the benchmark Hang Seng Index down 0.91 percent to 22,624.94. The China Enterprises Index of top locally listed mainland Chinese companies eased 0.93 percent to 12,327.68.
"Hong Kong stocks closely tracked the mainland market, the performance of which looked negative with a low risk appetite among investors," said Ample Finance Group Director Alex Wong. "Concern over further economic policy adjustments continues to haunt the market."
China Construction Bank Corp lost 1.5 percent, and Industrial and Commercial Bank of China Ltd fell 0.9 percent.
Chinese developer China Overseas Land & Investment Ltd dropped 2.2 percent to its lowest in seven months, while Cheung Kong (Holdings) Ltd fell 1.3 percent.
Consumer stocks, which are expected to be less affected by recent Chinese policy, are seen to be a better bet as personal incomes increase, brokers said.
Gold retailer Luk Fook Holdings (International) Ltd was up 1.7 percent in its biggest single day of gain in percentage term in two weeks. The jeweller said it was speeding up expansion in Chinese cities as increasingly affluent consumers snap up gold necklaces and ornaments.
Kunlun Energy, a unit of Chinese energy giant PetroChina Co Ltd, climbed as much as 3.2 percent after buying a 60 percent stake in PetroChina Beijing Gas Pipeline Co Ltd for 18.9 billion yuan ($2.85 billion).. It was up 0.8 percent at the midday break
Chinese auto stocks rebounded from recent weakness with Brilliance China Automotive Holdings Ltd, which tumbled 7.5 percent on Friday, rebounded 1.7 percent. Guangzhou Automobile Group Co Ltd surged 3.7 percent.
Auto stocks were hit last Friday after Beijing announced measures to limit new car registrations to tackle congestion in the city.. (Editing by Chris Lewis)