Hong Kong shares ended a choppy session at their lowest in a month on Tuesday, dragged down by a 4 percent loss for CNOOC after the Chinese oil giant announced plans to acquire Canadian oil producer Nexen Inc for $15.1 billion.

Typhoon Vincente forced cancellation of morning trade, so turnover was reduced, heightening market volatility. Fragile sentiment was not improved by a preliminary survey showing a slight improvement in July manufacturing in China.

In the mainland, where markets were unaffected by the typhoon, the CSI300 Index of the top Shanghai and Shenzhen listings gained 0.5 percent. The Shanghai Composite Index rose 0.2 percent from Monday's 40-month closing low.

The Hang Seng Index closed down 0.8 percent at 18,903.20, its lowest close since June 25. The China Enterprises Index of the top Chinese listings in Hong Kong shed 0.6 percent.

Investors are not too impressed at the big premium CNOOC is paying for Nexen, said Edward Huang, equity strategist at Haitong International Securities. It looks a bit expensive, but I think we need to wait for more details to make a final judgment.

Tuesday's fall left shares of CNOOC at their lowest close in a month. China's third-largest oil company hopes to sell the proposed deal to buy Nexen -- at a hefty 61 percent premium to Friday's stock price -- to shareholders and the Canadian government.

Its sector peer, China Petroleum & Chemical (Sinopec) Corp , fell 0.6 percent in Hong Kong but rose 0.8 percent in Shanghai after it agreed to buy a 49 percent stake in Talisman Energy Inc of Canada for $1.5 billion.


The Chinese property sector saw a divergence between its on- and offshore listings as domestic Chinese and foreign investors focused on contrasting policy developments in the sector.

Chinese property developers have outperformed the broader market in both markets in 2012, but have been hurt by official data last week that showed housing prices rising for the first time in nine months. That sparked fears Beijing could clamp down further on the sector.

On Tuesday, the Shanghai property sub-index rose 1.1 percent after the state-controlled China Securities Journal reported that the eastern Chinese city of Nanjing has started offering subsidies for some first-home buyers in a bid to spur sales.

Shanghai-listed Poly Real Estate and Shenzhen-listed China Vanke both broke a four-day losing streak, rising 2.1 percent and 1.3 percent, respectively.

But past attempts by some local governments to jack up property sales have been rebuffed by Beijing. That has left foreign investors sceptical on the sector, setting back the Chinese property developers listed in Hong Kong.

Another state-controlled newspaper, the Shanghai Securities News, reported on Tuesday that the State Council plans to send teams to inspect the local property markets in up to 12 provinces.

China Overseas Land & Investment Ltd declined for the fourth time in five sessions, slipping 1.1 percent. Longfor Properties shed 1.2 percent, its fifth straight loss.