SHANGHAI, March 27 (Reuters) - China stocks fell on Wednesday and the yuan weakened, pressured by the strengthened U.S. dollar, with strong selling by foreign investors weighing on the market even as data showed the economy is gradually recovering.
** Foreign investors sold a net 9 billion yuan ($1.25 billion) of Chinese shares via Stock Connect so far for the day, and were set to log the biggest daily outflow since mid January.
** The broad Asian markets lacked direction as investors wait for Friday's release of U.S. core inflation data.
** Data showed on Wednesday that China's industrial firms posted higher profits in the opening months of the year. But overall gains remain tempered by the persistent fragility in China's property market, pointing to a divergence in the country's post-pandemic recovery.
** At the midday break, the Shanghai Composite index was down 0.52% to 3,015.74 points.
** China's blue-chip CSI300 index was down 0.46%, with the consumer staples sector down 0.89%, the real estate index down 2.3% and the healthcare sub-index down 0.39%.
** Chinese H-shares listed in Hong Kong fell 0.9% to 5,773.2, while the Hang Seng index was down 0.63% to 16,512.92.
** The smaller Shenzhen index was down 1.52%, the start-up board ChiNext Composite index was weaker by 1.46% and Shanghai's tech-focused STAR50 index was down 1.12%.
** The Hang Seng Tech index lost 1.7%, but the Hang Seng Mainland Properties index added 0.5%.
** Around the region, MSCI's Asia ex-Japan stock index was weaker by 0.14%, while Japan's Nikkei index was up 1.14%. ($1 = 7.2269 Chinese yuan renminbi) (Reporting by Shanghai Newsroom; Editing by Shounak Dasgupta)
