HONG KONG (XFN-ASIA) - Share prices came off their early lows as select blue chips including China Mobile and Esprit Holdings drew bargain-hunting interest, but turnover was thin due to mounting worries about the global economy.

Commodity stocks slumped after another drop in oil and metals prices overnight after the IMF predicted that advanced economies will shrink next year.

At 11:25 am, the Hang Seng index was down 160.69 points or 1.17 pct at 13,629.35, off a low of 13,273.09 and high of 13,821.50.

Turnover was 16.51 bln hkd

Castor Pang, strategist at Sun Hung Kai Financial Group, said the market came off its opening lows as the Shanghai bourse was holding up relatively wel, helping some H-shares to recover.

"It appears that Shanghai was not affected much by sharp falls in Asian markets this morning and this helped some H-shares, including China Mobile, to recover from opening weakness," he said.

The Shanghai market's benchmark index was down just 0.33 pct in late morning trade.

Pang said some investors must have also noted recovery in the Korean market following another interest rate cut there.

Howard Gorges, vice chairman at South China Securities, said investors "should expect more economic slowdown after a spate of poor data and corporate earnings in the US and the rest of the world over the past months."

The Dow Jones Industrial Average tumbled 4.85 pct overnight, taking its two-day drop to about 10 pct, following dismal sales reports from most big US retailers and a jump in jobless claims.

A forecast by the International Monetary Fund (IMF) that advanced economies will shrink next year added to the jitters.

In sharp downward revisions to economic projections made less than a month ago, the IMF said advanced economies are now seen shrinking by 0.3 pct in 2009, instead of the prior estimate of 0.5 pct growth.

The IMF lowered its forecast for overall global growth to 2.2 pct for 2009, down from an earlier projection of a 3 pct increase.

Gorges said markets could eventually see more stability in the event that investors see signs that the interest rate cuts and stimulus measures adopted by governments are starting to work.

In a bid to stave off recession and stimulate growth, the European Central Bank cut its main refinancing rate by 50 basis points to 3.25 pct while the Bank of England slashed its key rate by 1.5 pct to a five-decade low of 3 pct.

"Eventually, people should believe that that the rate cuts and stimulus measures will turn the tide for global markets. In the meantime, people remain sensitive to bad economic news," Gorges said.

Among gainers, China Mobile was up 1.45 hkd or 2.21 pct at 67.20, China Life was up 0.05 hkd or 0.25 pct at 20.05 and Esprit was up 1.20 hkd or 3 pct at 41.20.

China Merchants Bank was up 0.52 hkd or 4.28 pct at 12.68 and ICBC was up 0.01 hkd or 0.28 hkd or 3.62, while Bank of Communications was down 0.07 hkd or 1.57 pct at 4.38 and Bank of China down 0.07 hkd or 3.24 pct at 2.09.

HSBC lost 1.35 hkd or 1.49 pct at 89.30 and Hong Kong Exchanges and Clearing was down 4.10 hkd or 5.53 pct at 70.10.

Oil and other resources counters tumbled following falls in commodity prices.

CNOOC lost 0.14 hkd or 2.43 pct at 5.62, PetroChina slipped 0.15 hkd or 2.69 pct at 5.43 and China Petroleum and Chemical Corp (Sinopec) was down 0.15 hkd or 3.09 pct at 4.39.

Zijin Mining shed 0.06 hkd or 2.67 pct at 2.19, China Shenhua was 0.96 hkd or 7.16 pct lower at 12.44, Jiangxi Copper was down 0.07 hkd or 1.69 pct at 4.07 and Angang Steel slipped 0.03 hkd or 0.44 pct at 4.52.

Chalco came off opening lows. It was down 0.08 hkd or 2.8 pct at 2.78 after news that it has shut down 38 pct of the group's annual alumina production capacity due to weak demand.

Airlines were mostly lower despite lower oil prices.

Air China lost 0.12 hkd or 5.69 pct at 1.99, China Southern was flat at 1.06 hkd and China Eastern fell 0.05 hkd or 5.05 pct at 0.94.

Cathay Pacific slipped 0.08 hkd or 0.87 pct at 8.01, extending yesterday's 14.32 pct fall after it warned of disappointing 2008 results due to weak revenue and potential losses on fuel hedging contracts.

The carrier said it incurred unrealized mark-to-market losses of 2.8 bln hkd on fuel hedging contracts as at end-October, up from September's losses of 630 mln.

Local properties were lower following a hike by Standard Chartered in its mortgage rate, a move expected to promt similar moved by other lenders.

Cheung Kong was down 1.95 hkd or 2.59 pct at 73.25, Henderson Land slipped 0.50 hkd or 1.74 pct at 28.20 and Sun Hung Kai was down 2.10 hkd or 3.31 pct at 62.85.

Standard Chartered confirmed that it has raised mortgage interest rates in Hong Kong by up to one percentage point.

"We raised mortgage rates for new loans by 50 to 100 basis points to between 3.5 pct and 4.25 pct. The hike was made taking into account developments in the market," a bank spokeswoman told

Mainland property developers traded mixed.

China Overseas Land gained 0.18 hkd or 1.94 pct at 9.47, Guangzhou R&F lost 0.11 hkd or 2.53 pct at 4.24, Agile Property was down 0.10 hkd or 3.65 pct at 2.64 and Beijing Capital Land was up 0.02 hkd or 2.5 pct at 0.82.

Exporters were mostly lower on worries about a drop in consumer spending in the US.

Yue Yuen Industrial slipped 0.20 hkd or 1.32 pct at 15 and Li & Fung was down 0.84 hkd or 5.25 pct at 15.16, but Esprit was up 0.70 hkd or 1.75 pct at 40.70.

PC maker Lenovo was down 0.13 hkd or 5.16 pct at 2.39 ahead of its first-half to September results.

(1 usd = 7.8 hkd)

jun.concepcion@xfn.com - xfnjcc/xfnrc

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