Deepening recession fears seen sinking HK shares

HONG KONG (Reuters) - Hong Kong blue chips were expected to drop further on Monday after suffering their worst week in six years, as U.S. job figures heightened recession fears.

U.S. mortgage companies were hit further after Thornburg Mortgage (TMA.N: Quote, Profile, Research, Stock Buzz) said it failed to meet creditors' demands for more upfront cash and said its survival was at stake.

"In the U.S., a recession is unavoidable," said Francis Lun, general manager at Fulbright Securities, adding the market would shed another 500 points before finding at the 22,000 level.

The latest U.S data showed that employers cut jobs by the most in nearly five years.

The benchmark Hang Seng Index .HSI on Friday closed down 3.6 percent, at 22,501.33 for a weekly loss of 7.5 percent.

The China Enterprises index of H shares .HSCE, or Hong Kong-listed shares in mainland companies, fell 9.5 percent for the week, marking its worst week since August 19. The index fell 3.5 percent, or 459.06 points on the day, to end at 12,606.83.

STOCKS TO WATCH:

* Asia's top refiner, Sinopec Corp (0386.HK: Quote, Profile, Research, Stock Buzz) notched up a steady increase in profits in 2007 compared with the previous year, Vice-Chairman Zhou Yuan said on Friday ID:nPEK216381.

He also said that when crude oil hit $100 a barrel, the oil refiner was losing 2,000 yuan ($281.50) for every tonne of gasoline it produced and even more on diesel ID:nPEK210527.