* Shanghai retreats 2 pct on weak global markets
* Hang Seng down 0.1 pct, pulls back from technical support
* Flurry of share placements weigh on markets (Updates to close)
By Vikram S. Subhedar and Lu Jianxin
HONG KONG/SHANGHAI, Aug 25 (Reuters) - Shares in Shanghai and Hong Kong fell on Wednesday as discouraging U.S. economic data stoked fears of a double-dip recession.
The Shanghai Composite Index fell 2 percent to 2,596.6 points, surrendering some of its gains from Tuesday, while the Hang Seng ended 0.1 percent lower at 20,635 after bouncing off a near-term support level.
Large cap shares such as integrated oil firm PetroChina and top Chinese lender ICBC, which are considered more sensitive to global economic conditions than other mainland stocks, led declines in Shanghai as investors pared positions and took profits from the broader market's rally of more than 10 percent since early July.
"Wall Street's fall is the key factor for the Chinese market today," said Cao Xuefeng, head of research at Western Securities in Chengdu, adding however that the more positive investor sentiment seen lately remained largely intact.
PetroChina's Shanghai-listed shares fell 1.4 percent whle its Hong Kong shares slid 0.8 percent.
Industrial and Commercial Bank of China, the world's biggest bank by market value, fell 1.5 percent in Shanghai and was unchanged in Hong Kong.
ICBC was also pressured after sources told Reuters that it could issue 25 billion yuan of convertible bonds next week, part of a flood of capital raising expected from Chinese banks and other firms over the coming months.
Worries about a global double-dip recession have heightened in recent weeks after persistently weak economic data from the U.S. and as Japan tries to stave off deflation.
Concerns over the impact of a slowing global economy spilling over into China could be overdone, however, with China's GDP motoring along at a healthy annual rate of 10.3 percent in the second quarter despite a faltering recovery in developed markets.
"Economic worries are taken as an easy excuse for a round of profit-taking after the index failed to breach a key resistance," said a trader at a major Chinese brokerage.
The index has recently tested but failed to break through the 2,680 barrier, partly as liquidity conditions have deteriorated to some extent due to too much share and bond supply coming into the market.
Eight stock IPOs are being offered this week, and analysts estimate they will freeze up around 800 billion yuan in subscription funds.
This week, there will also be a combined 87.5 billion yuan in bonds offered by the Ministry of Finance, local governments and Central Huijin Investment Co, the largest shareholder of the country's state-controlled banks.
HONG KONG SLIPS
In Hong Kong, the Hang Seng index briefly broke through near-term support around 20,586 level, where a gap opened on the upside on July 23, but later rebounded.
"The market is already quite sharply down from 21,800, so there is some bargain-hunting interest," said Kenny Tang, research head at Redford Securities.
Volume has remained stubbornly weak on the Hong Kong stock exchange, suggesting investors remain cautious about stepping back into the volatile market.
"We're seeing more and more share placements right after companies are reporting results," a Hong Kong-based trader said. "It looks as though they're coming in to raise capital while they can and that can't be an encouraging sign."
This week fixed-line operator PCCW and luxury watch distributor Hengdeli Holdings announced secondary share offerings shortly after announcing interim results.
Further weakness in Hong Kong could see the Hang Seng dip below a trendline support opening up the possibility of the index fallng back to its May lows.
Defensive large caps such as telecom companies such as China Unicom, which rose 1 percent, and Hutchison, up 1.3 percent, supported the broader market. ($1=6.8 Yuan) (Additional reporting credit for Jun Ebias) (Editing by Kim Coghill) ((vikram.subhedar@thomsonreuters.com; +852 2843 6975; Reuters Messaging: vikram.subhedar.reuters.com@reuters.net))