* SSEC -0.6 pct, CSI300 -0.7 pct, HSI -0.6 pct
* Onshore yuan weakens past 6.91 per dollar
* China treasury futures higher
SHANGHAI, Dec 20 (Reuters) - China stocks fell and the yuan weakened in early Thursday trade after the country's central bank announced a new targeted lending tool, hours after the U.S. Federal Reserve raised rates and largely maintained its outlook for more hikes next year.
The benchmark Shanghai Composite index was off 0.6 percent, turning down after a slightly higher opening. The blue-chip CSI300 index fell 0.7 percent.
China's yuan weakened past the 6.91-to-the-dollar level and was last trading at 6.9136 per dollar, 0.3 percent weaker than the previous day's late session close after the People's Bank of China (PBOC) set the midpoint of the currency's daily trading band weaker at 6.8936 per dollar.
In Hong Kong, the Hang Seng index lost 0.6 percent and the China Enterprises Index fell 0.8 percent after the Hong Kong Monetary Authority followed the Fed in raising its base rate up by 25 basis points, to 2.75 percent.
Before the market open, the Hong Kong Monetary Authority urged residents to be prepared for possible market volatility and warned of increasing downside risks to the economy due to the Fed's rate hike.
The Fed raised key overnight lending rate rates by 25 basis points as expected to a range of 2.25 percent to 2.50 percent. It kept the core of its plan to tighten monetary policy further, despite rising uncertainty about global economic growth.
On Wednesday, China's central bank rolled out a policy tool to spur lending to small and private firms, which some analysts said was effectively a targeted rate cut. The Targeted Medium-term Lending Facility (TMLF) is the PBOC's latest step to support a slowing economy amid a trade dispute with the United States.
Some analysts expressed doubt about the effectiveness of the measure.
"The (TMLF) could boost market sentiment, but is far from enough to stop the ongoing growth slowdown. Having slowed for the past 4 quarters, Chinese economy is only halfway through the current down-cycle," Macquarie economists Larry Hu and Irene Wu said in a note. "We expect policy makers to ease shadow lending in 1H19 to boost infrastructure spending, then ease property measures significantly in 2H19."
Chinese government bond futures moved higher. Ten-year Chinese treasury futures for March delivery, the most traded contract, were up 0.23 percent at 96.860.
Reporting by Andrew Galbraith Editing by Shri Navaratnam