Profit-taking in major blue chips following gains in the previous session dragged Hong Kong shares lower Friday, with China Mobile and HSBC leading the declines.

The benchmark Hang Seng Index fell 165.49 points, or 0.75 percent, to close at 21,772.73 after trading between 21,768.76 and 22,044.68 during the session, with a decreased total market turnover of 68.85 billion HK dollars.

All the four major stock categories lost ground. The Finance moved down 276.91 points, or 0.82 percent to close at 33,435.73. The Utilities went down 371.22 points, or 1.05 percent to 371.22. The Properties fell 104.83 points, or 0.41 percent to 25,362.51. The Commerce and Industry went down 92.11 points, or 0.74 percent to 12,292.78.

China Mobile and HSBC, the two largest constituents of the HangSeng Index by market capitalization, fell on profit-taking. HSBC slipped 0.7 percent to 142.50 HK dollars, while China Mobile was down 1.1 percent at 83.95 HK dollars. Oil stocks were mixed despite higher oil prices.

CNOOC, China's largest offshore oil and gas producer by output, climbed 0.6 percent to 8.86 HK dollars. Sinopec fell 0.8 percent to 8.65 HK dollars and PetroChina fell 0.9 percent to 11.52 HK dollars.

"The stock market took a pause today, with some investors locking in profits after yesterday's sharp rise," said Kenny Tang, associate director of Tung Tai Securities.

"Some investors simply stayed on the sidelines ahead of the long weekend," said Tang.

The stock exchange will be closed Monday for a public holiday marking the 10th anniversary of Hong Kong's return to the motherland.

Analysts said investors will remain cautious in the coming month on concerns about more tightening measures by the Chinese government to tame the country's red-hot economy.

Castor Pang, a strategist at Sun Hung Kai Research, said the local market could remain choppy in July as expectations of more tightening measures by the Chinese government will continue to weigh on investors.

"I predict the Hang Seng Index will move within the 21,600 to 22,000 range in the near term," said Tang of Tung Tai.

Nevertheless, analysts said the local market will probably resume its upward momentum after the summer holiday, with Sun HungKai's Pang saying the Hang Seng Index could hit 23,500 before the end of the year.

Zijin Mining rose 0.2 percent to 4.60 HK dollars after the Chinese copper and gold miner said late Thursday it will pay 429.8 million HK dollars to acquire a unit of UK-listed Avocet Mining to gain gold mining rights in Tajikistan.