SHANGHAI: Hong Kong and China stocks fell on Friday along with other Asian markets after President Donald Trump announced the United States would impose hefty tariffs on steel and aluminium imports, stirring concerns of a trade war.

Investors were also cautious ahead of next week's National People's Congress (NPC) gathering in Beijing, during which the Chinese government is expected to announce a further tightening of financial and regulatory policies for 2018 along with its key economic targets.

By the lunch break, the Hang Seng index dropped 1.5 percent to 30,568.02 points, while the Hong Kong China Enterprises Index lost 1.9 percent to 12,193.17.

China's blue-chip CSI300 index fell 0.4 percent, to 4,032.46 points, while the Shanghai Composite Index lost 0.3 percent, to 3,263.18 points.

Though China exports little steel to the United States, it is firmly in the crosshairs of the Trump administration on a number of other issues ranging from tinfoil to intellectual property and market access.

Major steel maker Baoshan Iron & Steel fell 3.5 percent, while Aluminium Corp of China was 1.3 percent.

For the week, Hong Kong stocks are poised to decline over 2 percent, while Shanghai shares are set to lose around 0.8 percent, as investors worry about the risks of faster US interest rate hikes.

Chinese brokerage Guodu Securities expected higher inflation and a tighter monetary environment ahead, and forecast "higher volatility, and bigger fluctuations" in stock prices.

Around the region, MSCI's Asia ex-Japan stock index was weaker by 1 percent while Japan's Nikkei index was down 2.3 percent.

The largest percentage gainers in the main Shanghai Composite index were Tongling Jingda Special Magnet Wire Co Ltd , up 10 percent, followed by Beijing Teamsun Technology Co Ltd, gaining 8.19 percent and Anhui Xinli Finance Co Ltd, up by 5.93 percent.

The largest percentage decliners in the Shanghai index were XiAn Shaangu Power Co Ltd down 8.82 percent, followed by Hangzhou Silan Microelectronics Co Ltd losing 5.16 percent and Shanghai Baosight Software Co Ltd down by 4.69 percent.

In Hong Kong, the sub-index of the Hang Seng index tracking energy shares dipped 2 percent while the IT sector fell 1.9 percent.

The top gainer on Hang Seng was China Resources Power Holdings Co Ltd, up 1.17 percent, while the biggest loser was Sunny Optical Technology Group Co Ltd which was down 2.65 percent.

The top gainers among H-shares were Sinopharm Group Co Ltd , up 2.35 percent, followed by Huaneng Power International Inc gaining 2.02 percent and CGN Power Co Ltd up by 0.96 percent.

The three biggest H-shares percentage decliners were China Citic Bank Corp Ltd which has fallen 3.12 percent, Air China Ltd which has lost 3.0 percent and People's Insurance Group of China Co Ltd down by 2.8 percent.