Alibaba, JD.com and Baidu sent Hong Kong stocks falling near two-week lows on jitters over China's economy and U.S. interest rates

Hong Kong Shares fell to a near two-week low as concerns about the strength of Chinese growth continued and optimism about an impending U.S. interest rate cut faded.

The Hang Seng Index fell 1.2 percent to 16,583.55 during the lunch break, heading for its lowest closing price since December 22. The Hang Seng Tech Index fell 2.4 percent, while the Shanghai Composite Index slipped 0.2 percent.

Alibaba Group Holding fell 2.7 percent to HK$72.70. JD.com fell 4.2 percent to HK$105.20 and search engine operator Baidu fell 3 percent to HK$111.90. City subway operator MTR fell 4 percent to HK$28.65 after Citigroup cut its rating on the stock to “sell” from “buy.” Smartphone maker Xiaomi fell 3.5 percent to HK$14.94 and PC maker Lenovo Group fell 4.2 percent to HK$10.58.

Both Hong Kong and Chinese stocks started the new year poorly, with benchmarks falling on the first day of trading on Tuesday. Investors remained jittery after an official report showed China's manufacturing sector contracted for a third straight month in December, signaling continued weakness in the economy, and a decline in home sales from the top 100 developers deepened during the month.

“General sentiment was negative as investors continued to grapple with uncertainties surrounding a weak economic recovery, housing decline and limited fiscal support,” said James Wang, strategist at UBS Group in Hong Kong. “Most investors appeared to be focused on high-dividend yield stocks, a strategy in which we see some near-term upside given the weakening of some leading economic indicators.”

Sentiment took a hit after rallies in U.S. technology stocks and bonds faltered and traders withdrew bets that the Federal Reserve would soon cut borrowing costs. Investors await minutes from the Fed's latest policy meeting and a set of labor market data expected later in the week.

The Departure The claim by a Chinese official who oversees the country's video game industry failed to significantly boost investor confidence. Feng Shixin gave up his official role as chief of the publication office of the Communist Party's Central Propaganda Department, the Post reported, citing sources.

Sanctioned stocks shunned by U.S. investors are top performers for Chinese funds

His removal from office came after a controversial draft proposal to regulate the industry sparked a backlash among traders and led to a plunge in gaming shares from Tencent Holdings to NetEase last month. Tencent rose 0.7 percent to HK$298.80 on Wednesday and NetEase rose 1.2 percent to HK$147.80.

Rongsheng Petrochemical rose 0.1 percent to 10.27 yuan in Shenzhen after it signed an agreement to buy a 50 percent stake in a Saudi Aramco refinery.

SolaX Powe Network Technology, an energy storage battery maker, rose 69 percent to 94.33 yuan on its first day of trading in Shanghai.

Other major Asian markets fell. South Korea's Kospi fell 2 percent and Australia's S&P/ASX 200 lost 1.1 percent, while Taiwan's Taiex slipped 1.8 percent. The Japanese market has yet to open for trading in the new year.