SHANGAHI, March 16 (Reuters) - Chinese stocks fell on Monday as the deepening Iran war curbed risk appetite and heightened uncertainty ahead of a highly anticipated March meeting between the Chinese and U.S. presidents.
** Hong Kong stocks rebounded after three consecutive days of declines as traders await results from heavyweights Tencent and Alibaba in a busy earnings week.
** China's blue-chip CSI300 Index .CSI300 fell 0.6% by the lunch break, while the Shanghai Composite Index .SSEC lost 0.7%. Hong Kong's Hang Seng .HSI rose 1%.
** Investors remain edgy as there's no sign of a quick end to the Middle East conflict that has roiled global markets and sent oil prices soaring.
** On Sunday, U.S. officials predicted that the U.S.-Israeli war on Iran would end within weeks, but Iran said it remained "stable and strong" and ready to defend itself.
** Although soaring oil prices driven by the unfolding Iran conflict will help China in its fight against deflation, it also means higher input costs for China's industrial sector and weaker global demand.
** "Cost-push inflation in an environment of weak demand does China little good," Gavekal Dragonomics analysts Thomas Gatley and Wei He wrote. Higher energy prices "will put downward pressure on real growth."
** The Iran situation also complicates outcomes of the upcoming summit between U.S. President Donald Trump and Chinese President Xi Jinping later this month.
** "Recent developments, especially in the Middle East, have added complexity to the outlook for the meeting," Morgan Stanley said in a note to clients.
** If the summit is cancelled or postponed, "we believe this would heighten market concerns over rising inflation and a further growth slowdown globally."
** Gold .CSI931238 related shares tumbled in China as reduced bets on U.S. rate cuts eroded the yellow metal's appeal.
** Metal .CSISNMIM and tech shares .STAR50 also suffered heavy losses as investors swarmed into defensive plays such as consumer .CSI000912 and banking stocks.
** In Hong Kong, tech shares .HSTECH rebounded after heavy sell-offs recently.
(Reporting by Shanghai Newsroom; Editing by Rashmi Aich)
((samuel.shen@tr.com))
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