HK stocks fall as oil refiners, airlines slide

(For Shanghai market reports, click [.SS])
(Updates to Thursday, details)

By Judy Hua

HONG KONG, May 8 (Reuters) - Hong Kong stocks fell 0.6
percent on Thursday in thin trade, tracking overseas markets,
with oil refiners PetroChina (0857.HK: Quote, Profile, Research, Stock Buzz) and Sinopec (0386.HK: Quote, Profile, Research, Stock Buzz)
leading the drop after crude prices hit a new record high.

Oil producers bucked the broad market trend as they cheered
crude prices hitting $123 a barrel, while telecom plays such as
China Unicom (0762.HK: Quote, Profile, Research, Stock Buzz) jumped on renewed speculation of an
industry reshuffle.

Market watchers said investors were cautious as they had been
spooked by the index's 2.5 percent fall on Wednesday.

"Trade is very thin as most traders sit on the sidelines. It
is very critical at this level, the index can go either way,"
said Peter Lai, director of DBS Vickers.

"During the correction period, we can think of bargain
hunting including in banks, retailers and Olympic-related
stocks."

He expects the Hang Seng Index to fall below 25,000 before it
comes back again. But in the medium term, the market will gain
support since the U.S. subprime problems are near the end and the
mainland A-share market is seen touching a bottom.

The benchmark Hang Seng Index .HSI closed down 0.63 percent
at 25,449.79. The main index has dropped nearly 9 percent so far
this year and is 20 percent off an all-time high hit in October.

The China Enterprises Index of Hong Kong-listed mainland
companies .HSCE, or H shares, fell 1.64 percent to end at
13,886.59.

Mainboard turnover .VM.HK fell to HK$76.95 billion ($9.9
billion) from HK$101.3 billion on Wednesday.

Shares in Asia's top oil refiner, Sinopec, fell 3.3 percent
to HK$7.87 and China's second-largest oil refiner, PetroChina,
dropped 2.4 percent as high crude prices further squeeze their
margins because domestic fuel prices are capped by Beijing.

Airlines also fell on high oil costs.

Flag carrier Air China (0753.HK: Quote, Profile, Research, Stock Buzz) fell as much as 5 percent
before closing down 2.2 percent at HK$5.72, while China Southern
(1055.HK: Quote, Profile, Research, Stock Buzz) dropped nearly 2 percent and China Eastern (0670.HK: Quote, Profile, Research, Stock Buzz)
fell 2.6 percent.

Heavyweight China Mobile (0941.HK: Quote, Profile, Research, Stock Buzz) fell nearly 1 percent
after the the world's biggest cellular carrier said it was
interested in the South Africa market but had not entered a bid
for operator MTN (MTNJ.J: Quote, Profile, Research, Stock Buzz), which is the subject of takeover
interest by India's Bharti Airtel (BRTI.BO: Quote, Profile, Research, Stock Buzz). [ID:nHKG136651]

Ping An Insurance (2318.HK: Quote, Profile, Research, Stock Buzz) fell 3.5 percent after it said it
had not changed its plan to offer local currency A shares. Rival
China life (2628.HK: Quote, Profile, Research, Stock Buzz), the most active stock for the day, fell 2.5
percent.

CITIC Resources Holdings Ltd (1205.HK: Quote, Profile, Research, Stock Buzz), China's
fourth-largest oil producer, jumped as much as 8 percent and the
country's top offshore oil specialist CNOOC Ltd (0883.HK: Quote, Profile, Research, Stock Buzz) rose 1
percent to HK$14.02.

Mobile carrier China Unicom (0762.HK: Quote, Profile, Research, Stock Buzz) rose 2.9 percent to
HK$17.1 percent, while fixed-line operator China Netcom (0906.HK: Quote, Profile, Research, Stock Buzz)
rose 2.6 percent.
($1=7.8 Hong Kong Dollar)
(Reporting by Judy Hua; Editing by Anne Marie Roantree)