Updates to the close

SHANGHAI, May 22 (Reuters) - Stocks in mainland China reversed earlier gains and ended lower on Thursday, as gains in banks and miners were outpaced by rising investor concerns over the fiscal health of the world's largest economy, which has dragged Hong Kong and its regional peers lower.

Investors turned risk averse after sharp declines on Wall Street and a spike in longer-dated U.S. Treasury yields, while U.S. President Donald Trump tried to push his sweeping spending and tax-cut bill through Congress.

** At the close, the benchmark Shanghai Composite index .SSEC was down 0.22% at 3,380.19 points, while the blue-chip CSI300 index .CSI300 was down 0.06% at 3,913.87 points.

** Banks outperformed the market, with the sub-index .CSI399986 rising 1%.

** China's recent decision to lower key rates, including deposit interest rates at major state-owned lenders, was expected to guide smaller lenders with similar moves to alleviate their shrinking interest margin pressure.

** Meanwhile, mining-related shares climbed, as investors rushed to safe-haven assets, such as gold, following mounting concerns over the U.S. government's growing debt. Western Region Gold 601069.SS rose 2.39% at the midday break.

** At the close of trade, the benchmark Hang Seng index .HSI was down 1.19% at 23,544.31 points. The Hang Seng China Enterprises index .HSCE fell 1.19% to 8,557.64 points.

** Around the region, MSCI's Asia ex-Japan stock index .MIAPJ0000PUS was weaker by 0.75%, while Japan's Nikkei index .N225 closed down 0.84%.

** Wendy Liu, chief China equity strategist at J.P. Morgan, said she's optimistic about A shares, despite expecting their peers in Hong Kong to outperform due to higher valuations.

** Liu expects the CSI300 index to climb to 4,150 points, or nearly 6% higher than the current level, in the base-case scenario, while hitting 4,420 points as a more positive outcome and 3,800 points in a more bearish case.

** She recommends buying internet and healthcare stocks and rates utilities and energy industries as "underweight".

(Reporting by Shanghai Newsroom; Editing by Mrigank Dhaniwala and Sumana Nandy)