HONG KONG, May 26 (Reuters) - China and Hong Kong stocks retreated on Monday, with automobile and Apple suppliers leading the decline.

** At the midday break, the Shanghai Composite index .SSEC was down 0.3% at 3,338.42 points. China's blue-chip CSI300 index .CSI300 was down 0.7%.

** In Hong Kong, the benchmark Hang Seng Index .HSI was down 1% at 23,366.06. The Chinese H-share index listed in Hong Kong, the Hang Seng China Enterprises Index .HSCE fell 1.3% to 8,474.69.

** Apple supplier stocks lost ground after U.S. President Donald Trump threatened tariffs on imported iPhones.

** iPhone assembler Luxshare 002475.SZ and mobile screen maker Lens Tech 300433.SZ both lost 1.3%. Airpod maker Goertek 002241.SZ declined 0.7%.

** Car-makers also slipped, weighing on both onshore and offshore markets. The CSI All Share Automobiles Index .CSI931008 lost 2.8% to near a one-week low, while the Hang Seng Automobile Index .HSAMI in Hong Kong tumbled 4.6%.

** "Sentiment has been weakening without significant fresh inflow and specific themes to trade on, analysts at China Securities said in a note.

** However, China's yuan CNY=CFXS has strengthened past the 7.17 level after the central bank tightened the midpoint fixing, and analysts say the strengthening trend of the currency should lend support to the nation's stocks.

** "We estimate every 1% of RMB increase versus the USD could boost Chinese equities by 3%," Goldman Sachs' China equity strategist Kinger Lau wrote in a note.

** Sectors such as consumer discretionary, property, and brokers typically outperform when the yuan appreciates, he added.

(Reporting by Jiaxing Li in Hong Kong; Editing by Rashmi Aich)

((jiaxing.li@thomsonreuters.com; +852 63358304))