* China stocks slip ahead of key economic data
* HK stocks ease as China telecom plays weigh
* Huaneng jumps after strong earnings, broker upgrade (Updates to close)
By Donny Kwok, Claire Zhang and Edmund Klamann
HONG KONG/SHANGHAI, Oct 21 (Reuters) - Hong Kong and Shanghai stocks fell on Wednesday as investors locked in profit ahead of key economic indicators due for release in China on Thursday and were waiting for hints of direction from the U.S. dollar.
Hong Kong stocks closed down 0.3 percent on Wednesday, retreating from a 14-month high after two straight gaining sessions. Telecommunications plays weighed on a weak earnings outlook but demand for assets plays slowed the slide.
China Mobile, the world's largest mobile carrier, fell 1.9 percent to HK$77.25. China Telecom, the country's top fixed-line telephone company, lost 2.62 percent to HK$3.72 after posting a drop in quarterly profit.
"The market underwent consolidation, not a correction, with liquidity still abundant," said Ben Kwong, chief operating officer at KGI Asia.
"A steady dollar kept players away and investors were sidelined for fresh incentives before betting on further upside," Kwong said. "Sentiment-wise, things are still positive."
The benchmark Hang Seng Index eased 66.85 points to 22,318.11. Turnover fell to HK$67.71 billion ($8.7 billion), from Tuesday's HK$74.18 billion.
The China Enterprises Index of top locally listed mainland Chinese stocks edged down 0.29 percent to 13,001.59.
China asset plays stayed firm with developer China Resources Land up 4.06 percent at HK$20. China Overseas Land rose 2 percent.
Brokers said asset revaluations due to underlying weak sentiment on the U.S. dollar had made China property stocks appealing, while power counters, which are sensitive to mainland economic policy changes, were in demand partly as a hedge against risk exposure to potential power tariff changes.
Huaneng Power, China's largest electricity provider, surged to as high as HK$5.63 before ending at HK$5.56, still up 7.54 percent from the previous session.
Huaneng reported that it had swung to a net profit in the third-quarter because of increased output from new operating units, two tariff rises in the second half of 2008 and lower coal costs. A Deutsche Bank research note on Wednesday upgraded Huaneng to "buy" from "hold" with target price at HK$6.30.
Guangzhou Investment jumped 28.26 percent to end at HK$1.77 after it announced a plan to separate its toll road business and focus on property business to capitalise on the robust growth of the Chinese property market.
SHANGHAI DOWN AHEAD OF DATA
China's key stock index edged down 0.45 percent on Wednesday, retreating from a two-month intraday high with metals shares soft as profit-taking emerged ahead of key economic data due for release on Thursday.
Analysts said the index was in need of consolidation after breaking through key chart resistance this week on expectations that forthcoming third-quarter GDP growth data would be strong.
The Shanghai Composite Index ended at 3,070.589 points after hitting a two-month intraday high of 3,105.514. It has gained more than 10 percent in the nearly two weeks since the market returned from the week-long National Day holiday.
"The index has risen fast, reflecting upbeat expectations about economic data due for release on Thursday. It may move lower to test 3,000, to see if it can offer strong support," said Chen Huiqin, senior analyst at Huatai Securities in Nanjing.
She added that the index could climb further to 3,200 points but had limited potential on the upside because of worries about possible monetary tightening.
Guo Yanling, head of research at Shanghai Securities, added: "The economic data due for release tomorrow will be strong. This is clear and expected. Investors are eyeing whether the data can be even better, although a surprise seems unlikely."
Comments by central bank Vice-Governor Ma Delun late on Tuesday, however, highlighted inflation risks when he said that a weak dollar could cause liquidity to flood into China and pose an inflation threat.
Losing Shanghai A shares outnumbered gainers by 625 to 258, while turnover slipped to 155 billion yuan ($22.71 billion) from Tuesday's one-month high of 167 billion yuan.
Shandong Gold sank 3.07 percent to 69.42 yuan after gold fell below $1,060 per ounce on Tuesday, as the dollar rebounded from its weakest level in 14 months versus the euro.
Minsheng Bank, China's first listed non-state lender, rose 1.57 percent to 7.75 yuan after saying it would earn a net profit of at least 11 billion yuan in 2009.
Huaneng Power International, China's largest electricity provider, advanced 1.81 percent to 7.89 yuan after saying net profit in the third quarter grew nearly four-fold as new facilities went into production. (Editing by Chris Lewis)