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Hong Kong shares closed 1.02 percent lower on Tuesday, in line with losses in Shanghai owing to concerns about possible measures on the mainland aimed at curbing rising property prices.
The benchmark Hang Seng Index fell 238.03 points to 23,143.91 on turnover of HK$65.11 billion ($8.40 billion).
The sell-off in property stocks was sparked after a number of mainland local governments recently unveiled new measures to restrict financing to potential homebuyers, including cutting off access to finance from their housing provident funds.
"People are concerned about a possible tightening measure from the Chinese authorities -- that's why property developers are dumped both in their mainland and Hong Kong listings," Lyncean Securities managing director Francis Lun said.
China Resources Land tumbled 4.4 percent to HK$21.50 while China Overseas Land lost 3.3 percent to HK$21.95.
Insurers were also lower, with China Life off 3.0 percent at HK$23.75 and Ping An off 2.0 percent at HK$65.70.
And among Chinese banks ICBC was down 1.9 percent to HK$5.60 and China Construction Bank slipped 1.8 percent to HK$6.39.
Chinese shares closed down 1.60 percent. The benchmark Shanghai Composite Index lost 38.65 points to 2,382.91 on turnover of 106.3 billion yuan ($17.0 billion).
"The property sector's fall, triggered by rumours of fresh tightening measures, is one major reason for overall losses in the market. Sectors that gained sharply earlier also have entered correction," Zheshang Securities analyst Zhang Yanbing told AFP.
Property developer Gemdale slumped 7.85 percent to 6.93 yuan, Poly Real Estate lost 5.05 percent to 12.22 yuan and Beijing Capital Development fell 4.49 percent to 10.84 yuan.
Cement producers ended lower on worries further tightening in the real estate sector would hurt demand for the construction material.
Anhui Conch Cement lost 7.59 percent to 19.72 yuan while Gansu Qilianshan Cement dropped 5.17 percent to 11.38 yuan.
-- Dow Jones Newswires contributed to this story --