HONG KONG  Chinese and Hong Kong stocks dropped on Tuesday as recent economic indicators offered little comfort to investors, while a lack of fresh stimulus policies also kept them on the sidelines.

China left its benchmark lending rates unchanged, in line with market expectations. Shrinking interest margins at lenders hampered continued easing efforts, after China lowered a string of key interest rates a month earlier.

Turnover remained low in both A-shares and Hong Kong.

Most sectors were down. Coal stocks lost 3.6%, as sluggish mid-year earnings and demand left traders disappointed. Hong Kong-listed mainland property stocks also fell 2%.

Downside risk to China's growth is rising, and all eyes are on policy, Goldman Sachs economists said in a note.

If the fiscal policy remains restrictive through the remainder of the year, "the various negative forces at play could reinforce each other and growth would slow further", they added.

China's bank lending tumbled more than expected in July and hit the lowest in nearly 15 years, according to data released last week.

The Shanghai Composite Index closed down 0.93% at 2,866.66, while the blue-chip CSI 300 Index lost 0.72.

The financial sub-index slipped 0.13%, consumer staples fell 0.95%, real estate lost 1.42% and healthcare dropped 1.1%.

The smaller Shenzhen index ended down 1.41%, and the start-up board, ChiNext Composite, was weaker by 1.341%.

In Hong Kong, the Hang Seng Index was down 58.49 points or 0.33% at 17,511.08. The Hang Seng China Enterprises Index fell 0.49% to 6,195.58.

The sub-index of the Hang Seng tracking energy shares declined 2.1% and the information technology sector dipped 0.59%, while the financial sector rose 0.32% and the property sector dipped 0.95%.

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.35%, while Japan's Nikkei closed up 1.8%.

  - Reuters