(Updates to midday)
* HSI down 0.1 pct, CSI300 up 0.8 pct
* HK markets vulnerable to short squeeze
* HSBC slides to 4-mth low, Europe remains key risk
* China railway names strong after policy change
By Clement Tan
HONG KONG, May 21 (Reuters) - Hong Kong shares look set to post a fourth-straight loss on Monday, dragged lower by weakness in Europe's largest bank, HSBC Holdings Plc as investors await details of a pledge by global leaders over the weekend to keep Greece in the euro zone.
Markets in mainland China were firmer on strength in the rail sector after the railway ministry announced over the weekend that it would decentralise bidding for railway projects, aiming to increasing transparency.
Also supporting was Chinese Premier Wen Jiabao's call for more policy support to boost growth in the world's second-largest economy in a statement on Sunday.
The CSI300 Index was up 0.77 percent at midday, while the Shanghai Composite Index had gained 0.3 percent. The China Enterprises Index of top mainland listings in Hong Kong was up 0.53 percent.
The Hang Seng Index was down 0.1 percent at 18,932.59. Resistance is seen at 18,985.4, the lower end of a gap that opened up on the charts between May 17 and 18 - a level that could be overcome with a significant development in Europe.
World leaders backed keeping Greece in the euro zone on Saturday, vowing to combat financial turmoil while revitalising a global economy increasingly threatened by Europe's debt crisis, although details were scant.
Markets in Hong Kong remain vulnerable to a short squeeze after short-selling interest averaged 11.2 percent of total turnover last week.
"We are trading tight and light today," said Jackson Wong, vice-president for equity sales at Tanrich Securities. "There's little buying interest and very passive trading."
In a sign that Europe remains the most significant risk, HSBC sank 1.3 percent to a four-month low and was the top drag on the Hang Seng Index. It has lost 11 percent this month, but bounced off the session's low at HK$62.55.
Tencent Holdings Ltd slumped 3.5 percent as funds continued to exit one of the top performers this year. Tencent has lost 12.4 percent after ending at HK$246.80 on May 3, an all-time closing high.
CHINA RAIL NAMES BOLSTERED BY POLICY CHANGE
Chinese railway plays were standout outperformers in both markets. Shanghai-listed China Railway Erju Co Ltd surged the maximum 10 percent.
Bigger sector player CSR Corp jumped 6.6 percent in Hong Kong and 4.3 percent in Shanghai. China Railway Group Ltd gained 3.7 percent in Hong Kong and 4.2 percent in Shanghai.
With headline growth slowing in China, investors also viewed Premier Wen's pledge to support growth as directly positive for fixed-asset investments such as infrastructure-related sectors including railways.
In a note on Monday, Citi strategists said this was the first time Premier Wen had indicated that stabilising growth should at the top of the country's economic agenda. "In our view, this signals that policy is shifting to defend growth," they said.
Still, measures to bolster domestic consumption are unlikely to help Chinese sports brands such as Anta Sports Products Ltd , which are struggling with inventory-related issues and competition from foreign brands.
Anta declined 4.8 percent to the lowest since April 2009. This follows a more than 9 percent plunge last Friday after the company warned that orders for the fourth quarter fell more than 10 percent in value terms year on year as competition intensified. (Editing by Chris Lewis)