* Hong Kong at more than 1-wk low, but recovers early losses
* China stocks lower, led by metals stocks
* Lilang retreats on debut as IPO sentiment soured (Updates to close)
By Sui-Lee Wee and Lu Jianxin
HONG KONG/SHANGHAI, Sept 25 (Reuters) - Hong Kong shares fell 0.13 percent to close at their lowest level in more than a week on Friday, dragged down by banking and telecoms counters. China stocks also declined after metals shares slipped on news of the imposition of anti-dumping tarriffs by the European Union.
Hong Kong's benchmark Hang Seng Index trimmed early losses as the key index gained support after falling to a near three-week low on Friday.
The benchmark index fell to as low as 20,766.46, its lowest since Sept. 8, before trimming losses to 21,024.40 at the close of trade, down 26.33 points. It opened 1.1 percent lower as banks and property plays remained soft.
"Risk-taking appetite is still there and the market started to firm after finding support at around 20,800 points," said Alex Wong, a director at Ample Finance Group.
"The underlying tone is cautiously bullish, although the recent poor debut of an IPO hit sentiment. A retreat below the issue price gave out a warning signal that a major change in sentiment may be around the corner," Wong said.
Index heavyweight China Mobile fell 0.7 percent to HK$78.30. HSBC was down 0.73 percent at HK$88.05.
Turnover was HK$56.41 billion ($7.28 billion), sharply down from Thursday's HK$78.69 billion.
The China Enterprises Index of top locally listed mainland Chinese stocks was up 0.08 percent at 12,056.48.
Menswear retailer China Lilang fell to as low as HK$3.63 on its trading debut, 6.9 percent below the issue price of HK$3.90 before steadying at HK$3.87 by the close of trade.
"Sentiment turned negative on IPOs after MCC's poor performance and Lilang was under the cloud," said Alfred Chan, chief dealer at Cheer Pearl Investment.
Lilang's debut came a day after Metallurgical Corp of China (MCC) marked Hong Kong's worst debut this year. MCC shares, which fell as much as 13 percent on Thursday, rose 1.25 percent to HK$5.68 but still below the issue price.
SJM fell 5.2 percent to as low as HK$4.23, its lowest since Sept 15, before settling at HK$4.34 intraday, down 2.69 percent, after the casino operator announced a plan to issue HK$2 billion ($258 million) in convertible bonds, raising funds for capital expenditure for Macau developments.
Real Gold Mining fell 17.5 percent to as low as HK$9.32 before steadying at HK$9.81, down 13.19 percent from the previous close. The gold producer said it would sell HK$1 billion new shares to a controlling shareholder at a discount, raising capital to fund acquisitions of gold mining projects.
SHANGHAI FALLS AS METAL STOCKS DOWN
China's key stock index closed 0.52 percent lower, suffering its biggest weekly loss in six weeks under pressure from new share supply, including initial public offerings.
The Shanghai Composite Index finished at 2,838.842 points, for a weekly fall of 4.2 percent as the China Securities Regulatory Commission pushed more shares into the market.
Among the flurry of fundraisings, China International Travel Service Corp, the country's top tourist agency, said on Friday that it raised 2.6 billion yuan ($381 million) in a Shanghai IPO this week to fund expansion.
Metals stocks were generally lower after news that the European Union decided to impose five-year anti-dumping tariffs on aluminium foil from three countries including China, and on Chinese seamless steel pipes.
Top steel maker Baoshan Iron and Steel closed down 0.45 percent at 6.62 yuan, while Aluminum Corp of China Ltd (Chalco) dropped 1.68 percent to 12.90 yuan.
Trading was sluggish with the approach of an eight-day holiday starting on Oct. 1, the country's National Day, seen as a major political event as it marks the 60th anniversary of the founding of the People's Republic of China.
Turnover dropped to 81 billion yuan ($12 billion), its lowest since March 16 and down from Thursday's 117 billion yuan, with losing Shanghai A shares outnumbering gainers 584 to 261.
"The index should have little potential to rebound sharply ahead of the holiday, with only three trading sessions left," said analyst Cao Xuefeng at Western Securities in Chengdu. "But it should have limited room to fall sharply as well."
The index once again slipped below the key 125-day moving average, now at 2,857 points, and the landmark for a bear market among Chinese investors.
But Cao and other analysts said the index had not yet convincingly breached that level, leaving leeway for a possible mild technical bounce.
Traders said they believed the main index may find support at a three-month low of 2,639, hit on Sept. 1, before the holiday, although they saw little chance for the index to regain the psychologically important 3,000 point level before the break.
Haitong Food Group, Friday's top gainer, bucked the market's downtrend and jumped its 10 percent daily limit to close at 14.14 yuan after it announced a major corporate restructuring, which many investors believed might benefit the company's long-term development.
Metallurgical Corp of China (MCC), the day's most active stock, closed 3 percent lower at 5.83 yuan.
Sentiment towards MCC, the Shanghai bourse's youngest counter, was hit by a very weak listing debut in Hong Kong on Thursday. (Editing by Chris Lewis)