UPDATE 2-Macau gambling review may aid casinos, stocks recover

* Casino stocks pare losses after 1-4 pct fall on rule review

* Table limits on casinos seen good for existing players (Recasts lead, adds quotes, details)

By Sui-Lee Wee

HONG KONG, Oct 13 (Reuters) - Macau's move to review gaming rules in the world's fastest-growing gambling market could brighten the outlook for casino stocks as potential curbs would help profits by limiting oversupply, analysts said on Tuesday.

Shares of Macau casino operators recovered most of their losses after falling as the Macau government (www.gov.mo.) said it was considering rules that might limit the number of tables and raise the age limit for casino customers. [ID:nN12141532].

Analysts and brokers however said investors' fears were overdone and did not reflect the outlook of Macau's six casino operators, among them Las Vegas Sands (LVS.N), Wynn Resorts, Galaxy, SJM Holdings Ltd, Melco Crown Entertainment Ltd (MPEL.O) and a casino run by MGM Mirage (MGM.N) and local businesswoman Pansy Ho.

"It's more psychological," said Francis Lun, a general manager at Fulbright Securities, referring to the stock falls on Tuesday. "The problem of Macau now is oversupply, so if the government restricts the supply, it is good for the existing players."

Macau, once a Portuguese colony and now a special administrative region under Chinese rule, has repeatedly sought to rein in the explosive growth in the only market in China where gambling is legal.

For a timeline on Macau's rapid rise over nearly a decade to become the world's leading gambling capital, click: [ID:nHKG10670].

Shares of Wynn Macau (1128.HK), the Asia unit of U.S. casino giant Wynn Resorts (WYNN.O), lost 1.1 percent before turning positive, and SJM Holdings (0880.HK), Macau gaming tycoon Stanley Ho's flagship firm, was down 3.5 percent.

Galaxy Entertainment Group (0027.HK) and Melco International (0200.HK) were down 1.4 percent and 3.8 percent, respectively.

Some of the stocks later pared those losses, with Wynn Macau even rising slightly above Monday's close.

The new rules appear to be aimed at cleaning up an industry that has seen explosive growth in the last three years.

Earlier government strictures, dating from April 2008, included a moratorium on new casino licenses and a building freeze, moves seen as motivated by an increasingly concerned Beijing.

RED-HOT GROWTH

Macau generated HK$105.6 billion ($13.5 billion) of gross gaming revenue in 2008, more than double the HK$46.7 billion generated by the Las Vegas Strip during the same period.