Hong Kong shares fell roughly one percent, as investors returning from their holiday break had their first chance to react to escalating tensions over North Korea.

China's blue-chip CSI300 index rose 0.1 percent, to 3,482.41 points by the lunch break, while the Shanghai Composite Index lost 0.1 percent, to 3,218.52 points.

Market participants, concerned about China's intense new property curbs wreaking havoc on the economy, drew some solace from data that showed accelerating home prices last month.

Average new home prices in China's 70 major cities rose 0.6 percent in March from February, higher than the previous month's reading of 0.3 percent, as the market shook off the impact of tougher cooling measures.

But many believe that China's solid economic growth in the first quarter - GDP grew 6.9 percent, the fastest pace since the third quarter of 2015 - is not sustainable.

"Quite a few people believe the recent recovery in cyclical sectors marks the start of a new round of economic cycle, but it might be just a short-lived rebound in China's long period of downcycle," wrote Li Xunlei, economist at Qiu Securities Asset Management Co.

Upbeat economic data is merely the delayed response to government stimulus measures, Li said, comparing the phenomenon to the time lag between lightening and thunder.

Sectors that are more vulnerable to cyclical downturns, such as transport, materials and financials remained sluggish on Tuesday, although defensive sectors, such as consumer and healthcare were strong, up over 1 percent.

Kweichow Moutai, the world's most valuable liquor maker, stock rose more than 1 percent to a record high, breaking through the 400 yuan mark.

HONG KONG

In Hong Kong, the Hang Seng index dropped 0.9 percent, to 24,039.45 points and the Hong Kong China Enterprises Index lost 1.0 percent, to 10,098.69, with sentiment hit by tensions on the Korean peninsular.

Following North Korea's failed missile launch on Sunday, tensions have escalated amid concerns that the isolated state may soon test another nuclear bomb or missile.

(Samuel Shen and John Ruwitch; Editing by Sam Holmes)