Share prices closed the morning lower tracking the overnight falls on Wall Street amid caution in the lead up to the first anniversary of the Sept 11 terrorist attacks next week, dealers said.
Oil stocks turned higher on the back of recent rises in oil prices due to the possibility of US military action against Iraq, they added.
The Hang Seng index closed the morning down 45.84 points or 0.47% at 9,680.19, off a high of 9,750.90 and a low of 9,631.73, on turnover of 3.369 billion hkd.
The Hang Seng September contract was at 9,690 points.
The China Enterprises index was down 7.84 points at 1,918.13, while the CAC index was 3.42 points lower at 1,064.60.
The GEM index was down 1.32 points at 134.36 on turnover of 40.000 million hkd.
The Tracker Fund was flat at 9.90.
"The Hang Seng Index was just tracking the overnight weakness on Wall Street, amid weak trading confidence in the run-up to the first anniversary of the Sept 11 terrorist attacks," Fulbright Securities general manager Frances Lun said.
The local bourse staged a "dead-cat bounce" earlier in the session, as there was a lack of compelling leads to fuel buying interest, except for bargain hunters, dealers said.
"The benchmark index is likely to test its support of 9,500 points in the near term," Lun said.
Among the major property stocks, Cheung Kong was flat at 55.25 hkd, Sun Hung Kai Properties was down 0.30 at 49.40 and Henderson Land up 0.10 at 25.35.
China Mobile was down 0.25 at 20.05 and Hutchison was flat at 51.00.
PCCW was down 0.02 at 1.28 after it reported a net loss of 713 million hkd in the six months to June, compared with a profit of 935 million a year earlier, after an exceptional charge of 1.8 billion hkd on a disposal.
China Unicom was down 0.05 at 5.40 after reporting that its six months to June net profit of 2.25 billion yuan came in at the top-end of market expectations.
HSBC was down 1.00 at 84.50, Hang Seng Bank was flat at 83.25 and Bank of East Asia added 0.05 to 14.40, while BOC Hong Kong lost 0.10 to 8.25.
Oil, in general outperformed the broader market on firmer crude oil prices, while aviation counters were lower on concerns over higher operating costs, dealers said.
Among oil stocks, CNOOC gained 0.01 to 1.61, Sinopec was flat at 1.20 and Petrochina added 0.01 to 1.61.
Among aviation stocks, Cathay Pacific ended the morning 0.35 lower at 10.90, China Southern Airlines down 0.15 at 2.125 and China Eastern down 0.03 at 0.99.
In the H-share sector, Chalco eased 0.04 to 1.06, Beijing Datang lost 0.05 to 2.65 and Qingling Motors dropped 0.01 to 0.80.
Among red chips, Legend was up 0.05 at 2.95, while Stone Electronic was down 0.01 at 0.46 and Shanghai Industrial was up 0.10 at 11.75.
On the GEM board, tom.com was down 0.025 at 2.30, CK Life Sciences dropped 0.03 to 1.75 and hongkong.com was flat at 0.186.
Elsewhere in the market, China Everbright Ltd was down 0.30 at 2.45 after it reported losses in the first half, reflecting large provisionings at its units China Everbright Bank and Everbright Securities.
China Resources Beijing Land was down 0.03 at 1.00 while COSCO Pacific was up 0.05 at 5.35 after announcing their results.