* Hang Seng down 0.4 pct, third straight losing session
* Shanghai slips 1.3 pct, investors continue to dump B shares
* Oil refiners weaker as high crude prices erode margins
* Car dealer Pangda shares slump 23 pct in Shanghai debut (Updates to close)
By Vikram Subhedar and Yixin Chen
HONG KONG/SHANGHAI, April 28 (Reuters) - Hong Kong shares fell for a third consecutive day on Thursday and fears that Beijing may act to cool rising property prices over the upcoming long weekend will probably keep the benchmark index capped until next week.
The Hang Seng index closed down 0.4 percent, with even a strong start to Chinese banking results failing to lift the benchmark towards prior highs.
In Shanghai, the main stock index fell 1.3 percent to a two-month low, with cement and property counters the weakest performers.
"Ahead of a holiday, investors are always cautious, especially as rumours are flying around," said Wen Lijun, analyst at Nanjing Securities.
Anhui Conch Cement , China's second-largest cement producer by output capacity, shed 6 percent and was the top drag on the Shanghai Composite. The stock had climbed some 36 percent over the past three months.
The property sub-index fell 1.4 percent with top developer China Vanke down 1.1 percent.
Worries about a possible interest rate hike this weekend and further government tightening on local property market may continue to drag on the A-share market, said Alan Lam, Greater China analyst at Julius Baer, in a note to clients.
Weak market sentiment was also evident in the IPO market as shares of Chinese car dealer Pangda Automobile Trade Co slumped 23 percent on their trading debut. [ID:nL3E7FS079]
MAINLAND SHARES WEIGH ON HK
Petrochina shares fell 3.1 percent and were the top drag on the Hang Seng after the company's results showed high crude oil prices were eating into refining profit margins.
Financials, supported by strong results from insurer Ping An and Agricultural Bank of China , helped offset weakness in oil producers but gave up gains as losses on the Shanghai market deepened.
The weak mainland market is likely to limit any upward move on the Hang Seng, said Lam, despite a strong start to first-quarter results with AgBank's bumper earnings. [ID:nL3E7FR0UQ]
Chinese banks, which carry the biggest weightings on benchmark indices in Hong Kong and Shanghai, are set to report strong first-quarter results as loan-books grow and fee income from services such as bank cards grow. [ID:nL3E7FS04W]
But a sharp two-day slide on Shanghai's speculative index of dollar-denominated B-shares was exacerbating the cautious sentiment.
Shanghai's B-share index, which has doubled over the past two years, has shed 8 percent over the past two days on rumours that the government would announce new policy measures soon, potentially during the upcoming May Day holiday.
One Hong Kong-based trader said the surge in volume on the otherwise illiquid B-share index probably gave a lot of domestic investors a chance to cash out, referring to the low volumes seen in B-share trading that make exiting positions difficult.
(Editing by Kim Coghill)