* HSI locked in narrow band near 13-month high
* China president reiterates stable fiscal policy
* Sinopharm in focus, trims HK debut gains (Updates to midday)
By Nerilyn Tenorio and Claire Zhang
HONG KONG/SHANGHAI, Sept 23 (Reuters) - Chinese shares were flat on Wednesday morning as Sinopharm's debut rally in Hong Kong lost steam, while Chinese President Hu Jintao's assurances of a stable monetary policy supported the mainland markets.
A consolidating Hong Kong market traded in a tight range, but remained close to the 13-month high hit last Thursday at the 21,700-point level.
Analysts said caution may continue to cap gains in the afternoon, in line with weak regional trends ahead of a U.S. Federal Reserve interest rate decision, although underlying sentiment remained hopeful for an improving economic environment.
"The market is building a new direction," said Belle Liang, head of research at Core Pacific-Yamaichi International (HK). "General sentiment at the moment is not that spectacular and that was reflected in Sinopharm's debut trade."
In Shanghai, blue chips are expected to remain stable ahead of a one-week national holiday from Oct 1.
Hong Kong's benchmark Hang Seng Index finished the morning session down 0.43 percent at 21,608.26 points, with turnover at HK$33.4 billion ($4.31 billion), up from midday Tuesday's HK$26 billion.
The China Enterprises Index of top locally listed mainland Chinese stocks was down 0.54 percent at 12,444.25.
Banks and financials were down 1.01 percent, with the sub-index at 33,799.71, while the property sub-index was 0.17 percent easier at 27,400.69 ahead of a Fed decision on interest rates.
Index heavyweight HSBC was down 0.8 percent at HK$91.05. China's leading lender ICBC lost 0.65 percent to HK$6.07, and Bank of China had slipped 1.39 percent to HK$4.27.
* Sinopharm Group Co Ltd, China's largest pharmaceutical products distributor, which raised $1.13 billion in its IPO, opened up 21.25 percent on its debut before marking a 23.4 percent gain. The stock, which was issued at HK$16, later trimmed gains to 18.4 percent at HK$18.94.
*Geely Automobile Holdings, China's largest privately-owned carmaker, was up 17.88 percent at HK$2.11, easing back from a 25.7 percent initial gain after the lifting of suspension. The carmaker said earlier that it planned to issue HK$2.59 billion ($334 million) in convertible bonds and warrants to an affiliate of Goldman Sachs.
SHANGHAI
China's key stock index slipped 0.4 percent on Wednesday with steel shares soft, as worries of more share supplies weighed on sentiment, although President Hu Jintao offered reassurances that monetary policy would remain stable.
The Shanghai Composite Index was down at 2,885.901 points, after falling more than 2 percent to a two-week closing low on Tuesday.
Losing Shanghai A shares outnumbered gainers 595 to 309, while turnover dropped to 58 billion yuan ($8 billion) from 70 billion yuan on Tuesday morning.
State television quoted Hu as reiterating Beijing's "active fiscal policy and appropriately loose monetary policy".
State media reported that the first 10 companies to be listed on a new second board for start-up companies, due for launch soon, would be priced at relatively high levels, reflecting strong investor interest, while the country's mutual funds would be allowed to invest in stocks on the start-up board.
Analysts said that while the second board was drawing investor attention, blue chips on the main board may remain relatively stable ahead of a one-week national holiday from Oct.1.
"The index is unlikely to show any clear direction before the holiday and is expected to be range-bound. The second board will be attracting all the attention," said Guo Yanlin, head of Shanghai Securities' research unit.
She added that Chinese investors were interested in going after new things like start-up shares.
Steel shares were soft, with Tangshan Iron and Steel sank 4.5 percent to 6.59 yuan after industry consultancy Umetal said its parent Hebei Iron and Steel Group, the world's fourth-biggest steelmaker, cut key product prices as excess supply weighs on the market.
China International Capital Corp said in a recent research report that it retained a cautious stance towards the benchmark index's outlook for this week and October.
Investors may lock in profit before the National Day holiday, it said, and increased share supply is expected to reach the market in October, although the launch of new mutual funds and a steady economic recovery could limit share price falls.
Several high-tech and new energy shares outperformed on Wednesday, as President Hu on Tuesday vowed to set a new target to rein in carbon emissions growth as the economy develops. [ID:nWEN3807]
FangDa Carbon New Material rose 5.2 percent to 9.40 yuan, while SUFA Technology Industry and Shenzhen Woer Heat-Shrinkable Material both raced up their by 10 percent daily limits in the morning session.
The average premium of Shanghai A shares over Hong Kong-listed H shares of the same companies closed at 13 percent on Tuesday, its lowest level since early January.
The official China Securities Journal said the dual-listed H shares of some companies were now more expensive than their A shares, especially in the financial sector, but analysts said A shares may stay relatively weak versus their Hong Kong counterparts, in part reflecting a shift in the spotlight to the start-up board. (Editing by Chris Lewis)