But buying in Chinese financials offset those losses, as did gains in railway operator MTR Corp (006), which rallied as much as 7.5 percent in heavy trade as its merger with KCRC looked to be sealed soon.

China Construction Bank (0939) hit a record, helping to drive the Hong Kong-listed shares in mainland companies, or H shares, 1 percent higher.

China COSCO (1919) also boosted H shares thanks to more follow-through buying, a day after the company said the bulk fleet it was buying from its parent would spend more than US$2.65 billion (HK$20.67 billion) to buy new ships.

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Market participants were divided on the market's outlook. Some said hopes of a US rate cut and the expected launch of China's direct offshore investment programme - its delays notwithstanding - kept sentiment firm.

But others said there was caution in the air.

Andrew Sullivan, sales trading director at Daiwa Securities, said investors would be eyeing the US non- farm payroll data due tomorrow.

The Hang Seng Index closed down 18.77 points at 24,050.40. The China Enterprises index of H shares gained 136.22 points to 14,423.13.

Mainboard turnover was light at HK$79.4 billion compared to Wednesday's HK$89.1 billion.

China Mobile fell 2 percent to HK$103.50. HSBC declined 0.4 percent to HK$139.10. After Friday's close, the blue chips will trade with their weightings in the Hang Seng Index capped at 15 percent.

MTR Corp ended the day up 7 percent at HK$22.05 as its property revenue is expected to climb substantially once its merger with KCRC is finalized.

Shipping plays scored further gains, led by China COSCO, which raced up 7.7 percent to HK$21.70. Mainland financials were firm, with Ping An Insurance (2318) gaining 3.2 percent to HK$79.90.

China Construction Bank, supported by its domestic share offer plan, ramped up 2.9 percent to HK$6.84. Oil producer CNOOC (0883) climbed 1.4 percent to HK$9.52. REUTERS