* H1 constant currency sales growth slows to 2%
* Jewellery, watches hit by Hong Kong unrest
* Costly digital push weighs on online distributors
* Shares down 5.2% (Recasts, adds CEO, CFO, analyst comments, shares)
By Silke Koltrowitz
ZURICH, Nov 8 (Reuters) - Shares in luxury goods group Richemont fell over 5% on Friday after it said political protests in Hong Kong weighed on first half sales and reported higher than expected losses at recently-acquired online distributors.
The maker of Cartier jewellery had been benefiting from its fast-growing jewellery business, but a slight slowdown in the division, weak watch sales and operating losses at online distributors Yoox Net-a-Porter and Watchfinder worried investors.
Watch sales have been under pressure, particularly in Richemont's biggest market Hong Kong, where anti-government protests have scared off tourists and battered spending in the Chinese-ruled city.
"Hong Kong is very exposed to watches and jewellery, the market was down around 10% in the first quarter, then we had a severe drop in the second quarter," Chief Financial Officer Burkhart Grund told investors during a call on the results.
He said the softness in jewellery was only temporary as big-ticket high jewellery items would be invoiced in the second half.
Hong Kong retail sales of jewellery, watches, clocks and valuable gifts dropped 47.1% in August and 40.8% in September, data showed last week.
Shares in the world's second biggest luxury goods group, up almost 26% so far this year, were down 5.2% at 0828 GMT, dragging down peer Swatch Group whose shares were 2.2% lower.
Richemont executives tried to reassure investors, saying that the adjustments of the group's watch wholesale network and its new digital initiatives, including the launch of a joint venture with Chinese online giant Alibaba, needed investment, but were showing promising results.
Citi analyst Thomas Chauvet said he expected the group to emerge stronger from its current transformation, but was concerned about the persistent weakness in watches and losses at YNAP that were unlikely to be materially reduced in the next couple of years.
"Richemont is effectively loss-making on 30% of group revenues," he said, maintaining a "Neutral" rating on the stock.
The executives declined to comment on whether Richemont was interested in U.S. jeweller Tiffany & Co., which LVMH offered to buy for $14.5 billion.
Grund said the group wanted to focus on developing its own jewellery brands, including recently acquired Italian jeweller Buccellati that will join Cartier and Van Cleef in Richemont's jewellery portfolio.
Sales rose 9% to 7.397 billion euros ($8.17 billion) in the first half of its 2019/20 fiscal year, but the rise was only 2% on a comparable basis, excluding online distributors.
Richemont said it had seen good progress in mainland China, Korea, Japan, the United States and the United Kingdom, making up for a double-digit decline in Hong Kong, echoing recent comments from peers LVMH and Hermes.
For a graphic on Swiss watch exports: tmsnrt.rs/2Jx4aNl
Richemont said its net profit was broadly stable at 869 million euros, excluding a 1.4 billion euro one-off gain in the year-ago period.
$1 = 0.9052 euros Reporting by Silke Koltrowitz; Editing by Michael Shields and Emelia Sithole-Matarise