HK shares fall for fifth day on grim economic news

* HSI ends at 5-week closing low, below 14,000 points

* China Eastern slides after profit warning

* Casino stocks pullback after recent rally

* China stocks slide on Dec export fall report

(Updates to close)

By Parvathy Ullatil

HONG KONG, Jan 12 (Reuters) - Hong Kong shares fell 2.8 percent on Monday, sagging to a five-week closing low, as grim U.S. unemployment data added to worries that global demand for Chinese exports was nowhere near to recovering.

The Hong Kong market has retreated for five straight sessions, matching a similar selloff in October, when the benchmark Hang Seng index .HSI plumbed its 2008 low.

"Investors had started to believe that corporate earnings downgrades may have been discounted by last year's steep fall in share prices," said Howard Gorges, vice chairman with South China Brokerage.

"But now the feeling is that the fall may be deeper while the recovery will take longer."

The Hang Seng Index .HSI ended down 406.44 points at 13,971.00 after opening 0.5 percent lower.

Mainboard turnover edged up to HK$46.3 billion ($5.9 billion) from HK$45.2 billion on Friday but investors remained cautious ahead of U.S. retail sales data later in the week.

Shares in China Eastern Airlines (0670.HK), one of the country's big three carriers, slid 7.1 percent to HK$1.04 after the airline said it would report a large loss for 2008 because of slumping traffic and losses on fuel price hedging contracts.

The airline estimated it would suffer a loss of about 6.2 billion yuan ($908 million) because it had marked down the value of its fuel hedging contracts after the unexpectedly steep drop of global oil prices late last year [ID:nSHA123458].

Bigger rival Air China (0753.HK) plunged 9.2 percent while China Southern Airlines (1055.HK) gave up 6.7 percent, dodged by worries of shrinking traffic amid the global downturn.

DEMAND WORRIES HOUND CHINA STOCKS

Shares in Asia's biggest oil & gas producer PetroChina (0857.HK) dropped 4.8 percent as grim U.S. economic data on Friday heightened fears that energy demand would fall this year.

China is expected to cut refined product prices by mid-2009, said Deutsche Bank, following an 18 percent reduction in gasoline prices announced in December.

The impending price cut will push Petrochina to lower its average selling price, driving earnings cuts of 9 percent for 2009, said analysts with the European brokerage.

Coal stocks fell after data showed an increase in stockpiles at power plants even as cold weather sweeps through China. China Shenhua (1088.HK) dropped 4.7 percent while smaller rival China Coal Energy (1898.HK) gave up 7.5 percent.

Other commodity counters also tanked on the weak global demand outlook with Aluminum Corp of China (2600.HK) shrinking 8 percent and bulk shipper China Shipping Development (1138.HK) plunging 13.3 percent.

"China may be planning an economic recovery with all its stimulus measures but the situation will be bad as long as exports continue to fall," said Castor Pang, strategist with Sun Hung Kai Financial.

China's exports and imports are expected to have fallen for a second consecutive month in December, according to media reports on Monday. [ID:nPEK85325]

"China enterprises are seen facing a serious problem this year with their profitability under threat," he said.

The China Enterprises Index of top locally listed mainland Chinese firms .HSCE fell 5.3 percent to 7,311.23.

Macau casino stocks pulled back from a string of sharp gains as investors who bought the stocks, on hopes of easier travel restrictions for mainland visitors in the near term, were disappointed.

Galaxy Entertainment (0027.HK), which soared nearly 90 percent in the last month, slumped 19.4 percent after a weekend visit to the former Portuguese colony by Chinese Vice President Xi Jinping did not yield any announcements on visa restrictions.

Stringent travel curbs imposed by the Chinese government coupled with the effects of a protracted global recession have strangled growth in the once-booming gambling haven. Most of the gamblers who visit Macau are Chinese residents.

Melco International Development (0200.HK), controlled by the son of gambling tycoon Stanley Ho, dropped 12.4 percent while Ho's SJM Holdings (0880.HK) fell 10.2 percent. (Editing by Kim Coghill) (parvathy.ullatil@thomsonreuters.com; +852 2843-6415))

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