The market received good news when China announced a March PMI of 53.1, well above forecasts of 50.5 and easing some concern about slowing Chinese economic growth.
Hong Kong blue chips surged more than 300 points higher in morning trading following gains on Wall Street on Friday, but lost all of that when China markets fell.
China and Hong Kong stocks rose for the second day in a row following big gains by Chinese stocks listed in the U.S. However, investors adopt a wait-and-see attitude on Europe.
Rebounds in U.S. and Mainland Chinese markets helped Hong Kong end a six-day losing streak, but volume remained weak. China stocks investors are looking to 2012 for gains.
Europe's struggles with its debt crisis continue to pre-occupy Chinese stocks investors, while expected credit loosening in China offers a ray of hope. However, one analyst cautions that there is uncertainty surrounding Chinese economic growth.
The Hong Kong market fell as the European debt crisis drove investors away from risk and into U.S. bonds. The drop in commodities also hurt Chinese oil and gold producers.
A report that the IMF would lend 600 billion Euros to debt-plagued Italy helped push the Hong Kong market sharply higher, although turnover remained weak.
China and Hong Kong stocks slid lower as optimism cooled about a solution to Europe's debt crisis at the upcoming EU summit meeting. Very thin turnover reflected a lack of momentum.
More bad news from Europe drove Hong Kong stocks lower as the Fitch rating agency downgraded Portugal's debt to junk status. Extremely thin turnover set the stage for volatility on Friday.
Hong Kong blue chips traded 100 points higher early in the day, but a decline in Mainland markets capped gains. Funds flowed into insurance companies, but automakers retreated.
Hong Kong stocks drifted lower, weighed down by persistent concern about the European debt crisis. The big four China banks' lending in December hit a three-year high, but bank stocks were soft.
Hong Kong opened higher on the strength of a global market rally and increased its gains as Mainland markets rose. China announced favorable policies for the agricultural technology sector.
Hong Kong opened slightly lower after a flat performance by stocks in the U.S. and traded in a narrow range to close marginally higher in reduced turnover.