SHANGHAI, Aug 3 (Reuters) - China and Hong Kong stocks were roughly flat on Thursday even as China's services activity expanded at a faster pace in July, while Hong Kong's private sector activity contracted for the first time in the year.
** China's blue-chip CSI300 Index was flat by the lunch break, while the Shanghai Composite Index edged down 0.2%. The Hong Kong benchmark Hang Seng edged down 0.1%.
** China's services activity expanded at a slightly faster pace in July, supported by a jump in business in the summer travel season, a private sector business survey showed on Thursday, partly offsetting the drag from the weak manufacturing sector.
** But the better-than-expected result did not help overall investor sentiment.
** Morgan Stanley downgraded MSCI China shares to equal weight on Wednesday as growth and valuation concerns remained.
** Despite the policy easing signals from the July Politburo meeting, key issues, including local government financing vehicle debt, property and labour markets and the geopolitical situation, need to improve significantly for sustainable capital inflows and further re-rating, the analysts said.
** China said on Thursday it is "willing to maintain communications" with the United States on a possible future visit by Chinese Foreign Minister Wang Yi to Washington, D.C.
** In Hong Kong, private sector activity contracted for the first time in July, the survey showed, further pointing to a weak economy, especially for the manufacturing sector.
** Tech stocks traded in Hong Kong were up 0.5%, while mainland property developers were down 0.9%. (Reporting by Shanghai Newsroom; Editing by Sohini Goswami)
