UPDATE 1-Foxconn, Hon Hai shares fall on weak earnings

* Foxconn shares fall to 4-week low after deeper H1 loss

* Parent Hon Hai leads tech decline in Taiwan on weak Q2

* Rising costs fuel margin concerns (Adds comment and updates stock price)

HONG KONG/TAIPEI, Aug 31 (Reuters) - Shares of Foxconn International Holdings Ltd (2038.HK) fell more than 10 percent on Tuesday morning, its biggest single-day percentage fall in 17 months, after the world's top contract cell phone maker reported first-half earnings fell deeper into the red.

Parent Hon Hai Precision Industry Co Ltd (2317.TW), Taiwan's top electronics parts maker, led technology shares lower in Taipei, sliding as much as 6.6 percent after it reported a weaker-than-expected quarterly profit. [ID:nTPV001900]

Taiwan-based Foxconn Technology Group, which includes Hon Hai and Hong Kong-listed unit Foxconn International, could see margins continue to trend down because of wage increases in the mainland, analysts said.

It would also take time for the group, which manufactures electronic devices for global brands including Apple Inc (AAPL.O), Dell Inc (DELL.O), Nokia Oyj (NOK1V.HE) and Hewlett-Packard Co (HPQ.N), to benefit from relocating its manufacturing facilities to inner China from higher cost coastal cities, they said.

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To view a Special Report on Foxconn and others heading to

inland China to beat rising costs, click: [ID:nSGE67P0A5]

For PDF version: r.reuters.com/tyr96n

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Foxconn fell to as low as HK$4.98 in first hour of trading, the lowest level since July 22. As of 0402 GMT, they stood at HK$5.13, down 7.73 percent and lagging a 0.86 percent fall by the Hang Seng Index .HSI.

"There was no catalyst to boost the stock in the short run," said William Lo, analyst at Ample Finance Group. "However, we see some catalysts in the longer run as it relocates its manufacturing facilities inland and its growing bargaining power with clients such as Nokia to increase (product) prices, particularly after it posted a deeper loss."

Lo forecast buying opportunities after a sharp fall to below HK$5 per share.

Foxconn recorded a January-June loss of $142.64 million, far worse than the $18.7 million loss it recorded a year earlier, hit by falling handset prices and higher depreciation costs as it moves production to inland China to escape rising labour costs. [ID:nTOE67Q05I]

PARENT HON HAI FALLS

Hon Hai, the most active stock on the Taiwan stock exchange by both volume and turnover, was down 6.2 percent to T$113.5 at noon, versus the TAIEX's 1.5 percent fall.

Despite the decline, Fuh Hwa Securities Investment Trust Vice-President and Fund Manager John Chiu said he saw limited downside for Hon Hai shares, based on hopes that Hon Hai was likely to make more iPhones and iPads for Apple in coming months.

"It will gain more orders from Apple in the second half, so don't have to be too pessimistic," said Chiu, adding that Hon Hai should see initial support at T$100-T$110. (US$1=HK$7.77) (Reporting by Donny Kwok and Baker Li; Editing by Chris Lewis)