UPDATE 1-China COSCO sees better 2010 after weak H2 results

* H2 net loss 2.87 bln yuan vs f'cast 1.76 bln yuan loss

* 2009 loss 7.47 bln yuan vs 2008 profit of 11.62 bln yuan

* Expects overall better results in 2010

* Shares eased 0.2 pct ahead of results

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By Alison Leung

HONG KONG, April 22 (Reuters) - Shipping conglomerate China COSCO Holdings (1919.HK)(601919.SS) said it expected its liners to have better operating results in 2010 after posted worse-than-expected second-half losses on weak shipping demand.

Container freight rates have been rising since the last quarter of 2009 on stronger demand and commodities shipping demand is expected to increase over the next few years, analysts said.

But they also expect the supply of dry bulk ships to increase this year, exerting downward pressure on shipping rates for cargoes, from iron ore and coal to agricultural products.

COSCO owns the world's largest dry bulk shipping fleet, operates the world's No.7 container liner and controls port operator COSCO Pacific (1199.HK).

"It is very likely that COSCO will return to the black in the first quarter with the effect of freight hikes late last year starting to kick in," said Geoffrey Cheng at Daiwa Capital Markets.

COSCO predicted overall better operating results in 2010 but that a rise in demand would be countered by an increase in competition.

"It is expected that annual average freight rates will increase significantly and liners will achieve better results of operation," the company said in a statement. "However ... the pressure on the container liner shipping market will continue."

The dry bulk market will be better this year but will see pressure from additional capacity supply, it added.

LOSS LAGS FORECAST

COSCO made a net loss of 2.87 billion yuan ($420.4 million) during the six months ended December against a loss of 3.5 billion yuan a year earlier, based on Reuters' calculations.

The results missed a mean forecast of 1.76 billion yuan in losses from 14 analysts polled by Thomson Reuters I/B/E/S.

For the full year, China COSCO posted a net loss of 7.47 billion yuan, reversing a profit of 11.62 billion yuan in 2008.

Domestic rival China Shipping Container Lines (2866.HK) 601866.HK also reported a net loss of 6.5 billion yuan for 2009 late on Wednesday.

Container shippers have seen the Asia-Europe route returning to profit since December and have their rates, but their transpacific lines are still suffering losses, according to UBS.

COSCO, along with the TransPacific Stabilization Agreement, is targeting an $800-1000/FEU price hike in the annual rate talks in May, but size of any increase will depend on negotiations.

The Baltic Exchange's main sea freight index .BADI, which tracks rates to ship dry commodities, was largely flat this year at around 3,009 points after it nearly quadrupled in 2009 from low levels a year ago.

China COSCO shares in Hong Kong have gained about 8 percent this year, beating a 1.9 percent loss on the broader market .HSI. But they rose just 3.5 percent in the second half of last year, lagging a 19 percent gain on the blue chip Hang Seng Index in the same period. (Editing by Don Durfee, David Holmes and Karen Foster) ($1=6.827 Yuan)