A sharp decline in index heavyweight HSBC on concerns over its fundraising needs dragged Hong Kong shares lower Tuesday, but the losses were narrowed by China Mobile, which bucked the downtrend after it reported a strong increase in new users.

The blue-chip Hang Seng Index fell 380.22 points, or 2.85 percent, to 12,959.77 after trading between 12,816.25 and 13,160. 87 during the session.

Traders said investors should take the opportunity to trim their positions before the Chinese New Year holiday next week, in case there is any bad news when overseas markets are trading. They warned that there might be more downside risk in the short term, as the US is in earnings season.

HSBC plunged 7.7 percent to HK$57.50, adding to its six-day, 16.6-percent slump on persistent capital-raising concerns, despite a statement from the bank late Monday denying speculation it is seeking support from the UK government.

Wireless mobile operator China Mobile bucked the downtrend on news it added a better-than-expected 7.07 million users in December on a continued migration to mobile from fixed-line. It rose 1.2 percent to HK$69.95.

Companies that issued profit warnings Monday also succumbed to heavy profit-taking. Foxconn International tumbled 7.3 percent to HK$2.79 after it said its 2008 net profit would fall significantly on the global economic downturn.

TPV Technology, which issued a profit warning late Monday, also fell sharply. It was down 10.5 percent at HK$1.70 after issuing the profit warning, citing "significant" forex losses, which was a surprise to the market.

China Citic Bank fell 2.1 percent to HK$2.75 despite saying its 2008 net profit may rise 60 percent. Traders said the positive outlook doesn't compensate for a sharp quarter-on-quarter earnings fall in the fourth quarter.