* HSI down 2.75 pct as sentiment hit by govt support fears
* China stocks down as commodity prices retreat
* MCC dives on debut; Geely extends gain after Goldman deal (Updates to midday)
By Donny Kwok and Claire Zhang
HONG KONG/SHANGHAI, Sept 24 (Reuters) - Hong Kong stocks fell 2.75 percent on Thursday, with sentiment eroded by worries over weaker government economic support and the lack-lustre performance of the city's biggest IPO so far this year.
China's key stock index fell 1.36 percent, with energy and metal shares soft as commodity prices fell, and after breaking below a key chart support level encouraged investors to lock in profit.
Brokers said investor confidence on further gains by the market was hit after the U.S. Federal Reserve said it would keep its policy rate steady but would slow purchases of mortgage debt, suggesting government may trim support for the economy.
"It implies that the low-interest-rate environment will gradually come to an end, and that put pressure on interest rate sensitive stocks such as banks and property firms," said Alfred Chan, a chief dealer at Cheer Pearl Investment.
Banks and financials weighed the sub-index down 3.26 percent at 32,661.14, while the property sub-index was down 2.34 percent at 26,675.46.
Index heavyweight HSBC was down 2.9 percent, China's leading lender ICBC lost 3.6 percent, and Bank of China <3988.HK> slipped 4.2 percent.
Sun Hung Kai Properties was down 2.2 percent.
Hong Kong's benchmark Hang Seng Index finished the morning session down 592.98 points at 21,002.54, with turnover at HK$46.8 billion ($6.04 billion), up from midday Wednesday's HK$33.4 billion.
The China Enterprises Index of top locally listed mainland Chinese stocks was down 3.42 percent at 12,007.11.
Construction and engineering company Metallurgical Corp of China (MCC), which raised $2.34 billion in Hong Kong's biggest IPO so far this year, marked the worst market debut in Hong Kong this year, signaling growing investor fatigue at the recent IPO boom and a weakening appetite for the region's upcoming stock offerings.
MCC, the most heavily traded stock, steadied at HK$5.60 at midday.
Its A-shares in China sagged 5.85 percent to 5.96 yuan, falling for a third straight day after a modest debut in Shanghai on Monday.
"The weak performance (of MCC) has further damped the already weak sentiment, suggesting the red hot IPO market may cool down," Chan from Cheer Pearl Investment said.
Bucking the weak sentiment, Geely extended its gain, climbing 10.3 percent to HK$2.35 as Goldman Sach's $334 million investment was expected to boost the Chinese carmaker's global ambitions, including a potential bid by its parent for Ford's Volvo brand.
Geely shares surged about 19 percent on Wednesday.
SHANGHAI
China's key stock index fell 1.36 percent during Thursday's early session, with energy and metal shares soft as commodity prices fell, and after a break below a key chart support level encouraged investors to lock in profit.
The Shanghai Composite Index ended the morning at 2,803.970 points, after slipping through support at the 125-day moving average and closing down 1.9 percent on Wednesday.
Energy and metal shares were soft as U.S. crude oil futures extended losses to fall towards $68 a barrel on Thursday while copper prices extended losses after falling 2.3 percent on the LME on Wednesday.
PetroChina, the index's most heavily weighted share, fell 0.4 percent to 12.72 yuan, while Jiangxi Copper lost 3.6 percent to 34.98 yuan.
Analysts said the index could be poised for a mild technical rebound, however, after falls in recent days, while China's economic fundamentals remained supportive for the market.
The official China Securities Journal cited Ba Shusong, a vice-director at the Development Research Centre, a think tank under China's State Council, as saying that the chances of China's economy hitting bottom again were declining given the strong recovery in the country's real economy.
An wave of new shares to the market from a steady stream of regulatory approvals for IPOs continued to weigh on sentiment, however, while investor attention was distracted by the planned launch of a new market for start-ups.
The first batch of 10 companies to be listed on the start-up board saw keen investor interest in their share offerings, allowing them to price their shares at an average of 55 times their 2008 earnings, about 50 percent above their mainboard peers.
"We are busy looking at those 10 start-ups that are about to be listed, while the main board lacks many opportunities for profit as it may remain weak with heavy new share supply," said Li Shiming, senior analyst at Xiangcai Securities in Hunan.
He added that, with the second board now in the spotlight, the main index was unlikely to rally much before the week-long national holiday that begins on Oct. 1.
Losing Shanghai A shares far outnumbered gainers 834 to 93, while turnover dropped to 51 billion yuan ($7 billion) from 58 billion yuan on Wednesday morning.
Mindong Electric Group raced up its 10 percent daily limit after regulators approved a private share placement with subsidiaries of Taiwan's Chunghwa Picture Tubes and Fujian Furi Electronics Co.
Fujian Furi rose 1.86 percent to 6.56 yuan.
Wuliangye Yibin, one of China's top liquor makers, was suspended from trade after the country's stock watchdog said it had not properly disclosed a securities investment loss and was found to have discrepancies in its stated core business revenue. [ID:nLN608944]
The news appeared to weigh on other spirits makers, with Kweichow Moutai dropping 3.13 percent to 160.02 yuan. (Editing by Chris Lewis)