Hong Kong, China stocks tumble as Iran war knocks Asian markets

Hong Kong stocks hit six-month lows on Monday while China shares wiped out this year's gains as the escalating war in the Middle East sent oil prices soaring and dampened risk appetite in markets across Asia.

Hong Kong's Hang Seng Index .HSI was down 3% by the lunch break, with energy .HSCIE the only sector to rise.

China's blue-chip CSI300 Index .CSI300 fell 2%, having hit the lowest level since December, while the Shanghai Composite Index .SSEC lost 1%.

Meanwhile, China's yuan CNY=CFXS hit the weakest level in a month against the rebounding dollar =USD.

Asian equities .MIAPJ0000PUS tumbled on prospects that the Middle East war could leave consumers and businesses worldwide facing weeks or months of higher fuel prices, threatening an already fragile global economy.

"The war has reduced risk appetite," Deng Lijun, strategist at Huajin Securities told investors in a road show.

"There's a lot of uncertainty, especially regarding how long the conflict will last."

Investors largely ignored data showing China's consumer inflation accelerated to the highest in more than three years on the back of the Lunar New Year holiday, while producer deflation persisted.

Sentiment was not helped by reports that a summit this month between U.S. President Donald Trump and China's Xi Jinping was unlikely to yield a breakthrough in bilateral ties.

Meanwhile, the ongoing annual parliament meeting in Beijing suggested China was in no hurry to roll out major fiscal or monetary stimulus.

Chipmakers .HSIT, healthcare companies .HSSCHI and property developers .HSCIPC were among the worst performers in Hong Kong.

In China, resource-related sectors such as energy .CSI000908, coal .CSI399998 and cement .CSI399998 rose, but tech shares .CSIINT, .STAR100 tumbled.

However, Huajin Securities' Deng said that the long-term uptrend of China's stock market had not ended, citing policy support and improving corporate earnings.

-Reporting by Shanghai Newsroom; Editing by Jamie Freed and Kate Mayberry/Reuters