Hong Kong stocks fall as U.S. threatens special status

Hong Kong shares ended lower in a volatile session on Thursday, as U.S.-China tensions escalated over a new security law after Washington threatened to withdraw a special status given to the city.

** The Hang Seng index closed down 0.7% at 23,132.76, after falling more than 2% mid-session to its lowest level since May 25. The Hang Seng China Enterprises index fell by 0.2%.

** The sub-index of the Hang Seng tracking energy shares was flat, the IT sector lost almost 2%, the financial sector ended 0.2% higher and the property sector was down nearly 1%.

** In late afternoon trade, China's parliament approved directly imposing national security legislation on Hong Kong to tackle secession, subversion, terrorism, and foreign interference in a city roiled last year by months of anti-government protests.

** U.S. Secretary of State Mike Pompeo said on Wednesday China's decision was "only the latest in a series of actions that fundamentally undermine" the city's autonomy and freedom.

** Business groups are urging U.S. President Donald Trump to go slowly in responding to Beijing, warning revoking the city's special U.S. privileges will hurt the territory and its people.

** Riot police were out in force in Hong Kong on Thursday as its legislators debated another piece of legislation, a bill that would criminalize disrespect of China's national anthem.

** About 2.36 billion Hang Seng index shares were traded, highest since last Friday. The volume traded in the previous trading session was 1.84 billion.

** Volatility was expected in Thursday's trade with Hang Seng index futures settlement date closing in, said Alvin Cheung, associate director of Prudential Brokerage.

** Around the region, MSCI's Asia ex-Japan stock index was flat, while Japan's Nikkei index closed up 2.3%.