Hong Kong shares ended 0.29 percent lower on Friday after a rally in the previous two sessions was capped by concerns the US Federal Reserve would end its monetary easing scheme earlier than expected.
The benchmark Hang Seng Index shed 67.51 points to close at 23,331.09 on turnover of HK$77.49 billion ($10.0 billion).
However, the slight dip after rising 3.3 percent over Wednesday and Thursday was just “a healthy technical correction”, said KGI Asia chief operating officer Ben Kwong.
“The two drivers for the Hong Kong market's uptrend - the China recovery story and abundant liquidity - remain intact,” he told Dow Jones Newswires.
While fiscal cliff woes have been put off, minutes from the Fed's December meeting show a growing bias towards some policy tightening this year, with some members looking to end its asset purchases during 2013 and others by the end of the year.
The Fed in September unveiled its third bond-buying scheme -
called quantitative easing (QE3) - to boost growth, saying it would not stop until the economy was up on its feet. And in December it added to that scheme.
Banking giant HSBC fell 1.56 percent to HK$82.00, China Mobile slipped 0.87 percent to HK$90.65 and Haitong Securities fell 3.3
percent to HK$12.96.
Mainland developer Hopson rose 10.5 percent to HK$16.06 and bourse operator Hongkong Exchanges also outperformed, closing 2.0 percent higher at HK$142.60.
Chinese shares closed up 0.35 percent on their first day of trade for the year, following a near three percent rise in the previous two sessions.
The benchmark Shanghai Composite Index added 7.86 points to 2,276.99 on turnover of 114.6 billion yuan ($18.4 billion).
The index gained 1.96 percent in this week's two trading sessions - the market was closed from Tuesday for a three-day New Year holiday.
Analysts said sentiment was boosted by hopes for a rebound in the domestic economy after an improvement in manufacturing activity, but investors also expect Beijing to unveil pro-growth policies next month.
Steel makers gained after an industry group said manufacturing activity and new orders in the sector recovered in December.
Luyin Investment Group surged by its 10 percent daily limit to 5.70 yuan while Fangda Special Steel Technology jumped 7.71 percent to 4.19 yuan.
Construction companies ended higher. China Railway Construction gained 8.69 percent to 6.38 yuan while China Railway Group rose 5.92 percent to 3.22 yuan. - Sapa-AFP