China stocks fell on Thursday after data showed activity in China's factory and services sectors swung into a negative territory in March, contracting simultaneously for the first time since the peak of the country's COVID-19 outbreak in 2020.

The CSI300 index fell 0.5% to 4,231.87 at the end of the morning session, while the Shanghai Composite Index lost 0.1% to 3,263.19 points.

The Hang Seng index dropped 0.8% to 22,052.49. The Hong Kong China Enterprises Index lost 0.7% to 7,558.62.

** The official manufacturing Purchasing Managers' Index (PMI) fell to 49.5 from 50.2 in February, while the non-manufacturing PMI eased to 48.4 from 51.6 in February.

** The world's second-largest economy is now at the risk of slowing sharply as authorities restrict production and mobility in many cities, including Shanghai and Shenzhen, to stamp out a rash of COVID-19 outbreaks.

** "Markets so far have underestimated the severity of the situation in China because it is difficult to fully reconcile and understand," said Nomura analysts in a note. "In the next couple of months, we expect global investors to better reflect these shocks in their valuations of various asset classes."

** China will rollout policies to stabilise the economy as soon as possible, as the downward pressure in the economy increased, state media CCTV quoted a cabinet meeting as saying on Wednesday.

** The country will refrain from introducing measures not conducive to stabilise market expectations, the meeting also said.

** Semiconductors went down 2.4%, information technology firms lost 1.7%, and new energy stocks slumped 3.3%.

** Real estate developers gained 2.8% and banks added 1.6%. The central bank is expected to cut rates and lower reserve requirements for banks as downward economic pressures build.

** In Hong Kong, Baidu Inc dropped 4% after U.S. added the search engine giant, along with other four companies, to the latest batch of stocks potentially facing delisting from the U.S.

** China's securities regulator said on Thursday both China and the United States have a willingness to solve their audit disputes, and the outcome depends on the wisdom of both parties.

** The Hang Seng Tech Index retreated 1.3%.

(Reporting by Shanghai Newsroom; editing by Uttaresh.V)