* Negative outlook on HK property, energy issues worsens on S&P move
* China sees profit-taking in property, financial stocks
* Shanghai underperforms Hang Seng (Updates to midday)
By Clement Tan and Yixin Chen
HONG KONG/SHANGHAI, April 19 (Reuters) - Hong Kong stocks traded lower on Tuesday morning, with property and energy counters continuing to underperform as weak global markets following a warning on the United States' credit rating gave a further excuse for investors to take money off the table.
Standard & Poor's on Monday revised downwards its credit outlook for the United States, citing risks that policymakers may not reach agreement on a plan to slash the huge federal budget deficit. [ID:nN18195555]
Volume remained thin for the fourth consecutive session as the benchmark Hang Seng Index closed down 1.3 percent to 23,524.8 at the midday trading break, outperforming the Shanghai Composite Index , which dipped 1.9 percent to 2,999.8 and the Nikkei , down 1.5 percent.
"The timing of (S&P's) announcement is very important," said Mark To, a Wing Fung Financial Group analyst. "People may start to think the recovery prospects in developed markets are dimming."
To expects support for the benchmark at its 50-day moving average, currently at 23,336.8.
Financials weighed the most on the benchmark, but property and energy shares were weaker for the third session running, with analysts expecting these cyclical sectors to continue to pressure the broader market.
The Hang Seng property sub index underperformed, down 1.6 percent, with China Overseas Land & Investment Ltd shedding 2.5 percent and China Resources Enterprise Ltd falling 2.3 percent.
Analysts said this could be a reaction to the latest round of China policy tightening as investors reduce exposure to sectors seen to be likely impacted by growth-slowing policies.
While there are some fears that funds could be trickling out of the territory, evidenced by the depreciation of the Hong Kong dollar in the last seven days, one analyst said it was most likely short term money.
"It's too early to say that funds are flowing out, but what's clear is that the flow of funds into Hong Kong is slowing down," said Ben Kwong, Chief Operating Officer at KGI Asia Ltd.
A Daiwa report last Friday warned of a risk of a reversal of capital inflows to Hong Kong with the likely rise in the cost of the long Hong Kong dollar carry trade as a second round of quantitative easing by the U.S. Federal Reserve approaches its end in June.
SHANGHAI DIPS BELOW 3,000 PSYCHOLOGICAL LEVEL
China's main stock index tumbled 1.9 percent on the downgrade to the United States debt outlook.
The benchmark Shanghai Composite Index fell to 2999.8 points, below the key 3,000-point level, after a 0.2 percent rise on Monday.
"The index was largely hurt by the weak global market, with a correction after a peak," said Cheng Yi, analyst at Xiangcai Securities in Shanghai. "But we still think the index has potential to rise slightly due to ample liquidity and good earnings results."
He expected the index could find support at 2,950 points and face resistance around 3,100.
Investors took profits in the property and financial sectors, which had recently outperformed the market in speculative trade.
The property sub-index slumped 1.4 percent, while the sub-index of financial issues dropped 2.2 percent.
Shares of China Vanke , the mainland's biggest developer, fell 2.1 percent, while Jiangxi Zhong Jiang Real Estate dropped 6.3 percent.
Almost all 16 banking shares listed on the Shanghai and Shenzhen market fell, with Hua Xia Bank dropping 2.5 percent and Industrial and Commercial Bank of China (ICBC) , the mainland's largest bank by valuation, declining 1.9 percent. (Editing by Jonathan Hopfner)