(Updates to midday)
* HSI flat, CSI300 down 1.6 pct
* China property hit by rumours of more sector curbs
* HK property mixed after curbs on housing loans announced last Friday
By Clement Tan
HONG KONG, Sept 17 (Reuters) - Mainland Chinese markets are set for their worst loss in three weeks on Monday with the property sector a key drag, dampened by worries of more curbs which will crimp sales during the traditional peak season in late September and October.
Onshore weakness extended to offshore markets in Hong Kong, keeping the Hang Seng Index flat at midday with the benchmark index hovering at four-month highs it reached last Friday.
The CSI300 Index of the top Shanghai and Shenzhen listings went into the lunch break down 1.6 percent, while the Shanghai Composite Index was down 1.3 percent. Both indices are now set for their worst losses since Aug. 27.
"In this jittery market, any headlines on such a key sector are bound to trigger a reaction," said Hong Hao, chief strategist at Bank of Communications International Securities.
Two of the biggest property developers listed in the mainland saw steep losses. Shenzhen-listed China Vanke lost 3.8 percent, while Shanghai-listed Poly Real Estate dived 5.8 percent.
In Hong Kong, China Overseas Land & Invesment shed 2.3 percent, while China Resources Land slumped 4.6 percent partly after media reports suggested the company may buy property from its parent.
A trader at a top Chinese brokerage said the sector was also hit by rumours of an extension of property taxes in the mainland.
This comes after state-run media reported last Friday that regulators were watching overly high prices in government land sales. Premium rates and opening prices at land sales and speed of housing development are amongst the factors scrutinised to avoid land hoarding by real estate developers.
Other Chinese local media reported over the weekend that a developer sold new apartments in Beijing at a much higher price that were built on prime land intended for subsidised housing it had obtained at a low price.
Chinese property stocks have been declining steadily since official data in July showed housing prices increasing for the first time in nine months. This carried into August, with the next housing price data expected on Sept 18.
By contrast, Hong Kong property developers were mixed despite moves by its de facto central bank to curb home loans to prevent the city being flooded with money from the U.S. Federal Reserve's latest stimulus plan.
Sun Hung Kai Properties climbed 1.2 percent and Cheung Kong Holdings edged up 0.5 percent, but Sino Land lost 1.8 percent and Henderson Land slipped 0.7 percent.
In a report dated Sept. 14, Citi said it did not expect home prices in Hong Kong to see any major decline of more than 5 percent from current levels as a result of the U.S. Federal Reserve's third round of quantitative easing.
"We believe the announced measures are strong enough to contain the home price rally for 3-6 months...but we think longer term, this announcement removes policy risk overhangs and see a likely attractive opportunity to accumulate...on expected weakness," Citi analyst Ken Yeung said in the same note. (Additional reporting by Chen Yixin in SHANGHAI; Editing by Jacqueline Wong)