China, HK stocks drop as doubt over economic recovery weighs

SHANGHAI, April 24 (Reuters) - China and Hong Kong stocks started the week on a soft note amid lingering concern over the sustainability of the economic recovery, despite more bullish forecasts from global banks.

** China's blue-chip CSI300 Index dropped 0.4% by the lunch break, while the Shanghai Composite Index fell 0.2%. Hong Kong benchmark Hang Seng lost 0.6%.

** Investors are looking beyond companies' first-quarter results for signs that China's economy is indeed on its feet.

** China's economic growth of 4.5% in the first quarter beat expectations, but "favourable base effects will fade" in the second half, while "the economy remains characterised by an uneven pace of recovery," DBS wrote in a note to clients.

** Retail sales and production are picking up gradually; public sector investment has picked up, but private investment growth is anaemic, and the external demand outlook is uncertain, the bank said.

** The caution clouds the market, despite upgrades on China's economy from some global institutions, including BofA Global Research, J.P.Morgan, Citigroup and UBS.

** "Uncertainty on the real estate recovery is a major factor holding back the market right now," wrote Qi Wang, co-founder and CIO of MegaTrust Investment (HK). "I think the market is questioning how sustainable the consumption strength is if real estate fails to recover."

** China's tech-focused STAR Market fell 1.7%, while consumer and materials stocks also dropped.

** In Hong Kong, property and financial shares led the declines. (Reporting by Shanghai Newsroom; editing by Eileen Soreng)