China blue-chips set to snap winning streak; HK stocks drop

* SSEC -0.8 pct, CSI300 -1.1 pct, HSI -1.2 pct

* Beijing steps up control on capital outflow

* Investors little excited by new electricity transmission reform

SHANGHAI, Dec 2 (Reuters) - China stocks fell on profit-taking on Friday morning, nearly erasing this week's gain and spoiling chances of advancing for an eighth consecutive week, with liquidity concerns offsetting any boost from a solid November manufacturing sector survey.

Hong Kong shares, which are more exposed to global markets, ended the morning session lower, and were on track to fall the most in two weeks, as oil price leveled off.

The blue-chip CSI300 index fell 1.1 percent, to 3,526.69 points at the end of the morning session, bringing its weekly gain to less than 0.2 percent, while the Shanghai Composite Index lost 0.8 percent, to 3,247.67 points.

The Hang Seng index dropped 1.2 percent, to 22,612.60 points, and lost nearly 0.5 percent for the week. The Hong Kong China Enterprises Index lost 1.0 percent, to 9,796.02 points.

A spike in short-term borrowing costs and treasury yields raised liquidity concerns, curbing investors' risl appetite going into the weekend.

Most sectors in China lost ground, with financial , real estate and tech shares among the worst performers.

An index tracking the infrastructure sector dipped, as investors appearing unimpressed by Beijing's approval of 105 pilot projects to lead its reform of electricity transmission and distribution pricing.

Energy shares rose on higher restructuring hopes.

Shares in China Petroleum & Chemical Corp jumped nearly 5 percent, after China Petrochemical News reported that Chairman Wang Yupu had urged faster internal reforms in the company.

In Hong Kong, almost all main sectors lost, with tech stock and services shares leading the decline.

The long-awaited Shenzhen-Hong Kong Stock Connect will launch on Monday. Analysts expect the scheme will benefit Hong Kong more as small-cap stocks are much cheaper there than in Shenzhen. ($1 = 6.8836 Chinese yuan renminbi)

(Reporting by Jackie Cai and John Ruwitch; Editing by Simon Cameron-Moore)

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