SHANGHAI, May 20 (Reuters) - China and Hong Kong stocks fell on Wednesday, tracking broad declines across Asia on heightened Middle East tensions and inflation concerns.

** China's blue-chip CSI300 Index .CSI300 edged down 0.3% by the lunch break, while the Shanghai Composite Index .SSEC lost 0.5%. Hong Kong benchmark Hang Seng .HSI was down 0.6%.

** The CSI New Energy Index .CSI399808 rose 1% as stalled U.S.-Iran talks kept oil prices elevated.

** President Donald Trump said the United States may need to strike Iran again but suggested Iran wants a deal to end the war that has roiled markets and sent energy prices soaring.

** Onshore semiconductor shares .CSIH30184 rallied 3.1%, with Hua Hong Semiconductor Ltd. 688347.SS up 11%, after Yangtze Memory Technologies, the country's largest domestic flash memory chip maker, submitted its initial public offering tutoring registration report, marking the official start of its onshore listing process.

** Onshore financial .CSI300FS and property .CSI000948 shares fell 0.8% and 2.4%, respectively.

** On the policy front, China left benchmark lending rates unchanged for the 12th consecutive month in May on Wednesday, in line with market expectations.

** Tech majors listed in Hong Kong .HSTECH were up 0.2%, after having declined 12% this year.

** First-quarter 2026 earnings from internet giants reported over the past week have bolstered confidence in a valuation re-rating for the MSCI China Index, prompting an upgrade of the consumer discretionary sector to neutral from underweight, analysts at JP Morgan said in a note. The investment bank also reiterated their positive view towards China's artificial intelligence sector.