Alibaba drags Hong Kong stocks lower; China slips

SHANGHAI, Nov 17 (Reuters) - Hong Kong shares fell on Friday, dragged by a slump in index heavyweight Alibaba Group after it scrapped plans to spin off its cloud business, while China stocks slipped.

** Hong Kong's Hang Seng Index dropped 2.2% and the Hang Seng China Enterprises Index slumped 2.3% by the midday recess.

** The blue-chip CSI 300 Index fell 0.3%, while the Shanghai Composite Index was down 0.2%.

** Other Asian shares took a breather as a batch of softer U.S. economic data took some of the steam out of Wall Street, but also boosted bonds in a big way while slugging oil prices in a boon for the inflation outlook.

** E-commerce giant Alibaba Group's Hong Kong shares slumped 10% after it scrapped plans to spin off its cloud business, citing uncertainties fuelled by U.S. curbs on exports to China of chips used in artificial intelligence applications.

** Also denting sentiment, Chinese billionaire Jack Ma's family trust is set to sell 10 million American Depository Shares of Alibaba for about $871 million, the company said in regulatory filings.

** The Hang Seng Tech Index lost 2%, with social media giant Tencent and food-delivery firm Meituan down 2.6% and 3%, respectively.

** Onshore China shares remained weak, following last session's drop as investors were underwhelmed by a meeting between U.S. President Joe Biden and Chinese leader Xi Jinping.

** However, analysts at DBS said the Biden-Xi summit "could now bolster sentiment more significantly" although "investor concerns over Chinese growth loom large."

** "With a thaw in the US-China relations and President Biden saying that the US wants better ties to help China's economy, there is scope for a return of US investment back into Chinese assets going forward," they said in a note.

(Reporting by Shanghai Newsroom; Editing by Sohini Goswami)