Hong Kong stocks fall as refiners, airlines slide

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

HONG KONG, May 8 (Reuters) - Hong Kong stocks fell 0.7
percent on Thursday, 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.

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

"Nobody was prepared for yesterday's fall, so people are very
cautious now. They are trying to figure out if there's going to
be more bad news before they jump into the market again," said
Phillip Securities strategist Y.K. Chan.

"We expect the market to move in a narrow range around 25,500
points, unless the A-share market jumps a lot in the afternoon."

China's main stock index .SSEC, which tumbled 4 percent on
Wednesday amid worries over the inflation outlook, rebounded 0.95
percent on Thursday morning.

The benchmark Hang Seng Index .HSI dropped 0.72 percent to
25,424.90 by midday.

The China Enterprises Index of Hong Kong-listed mainland
companies .HSCE, or H shares, fell 2.17 percent to 13,812.04.

Mainboard turnover fell to HK$44.12 billion ($5.7 billion)
from HK$55.82 billion on Wednesday morning.

Shares in Asia's top oil refiner Sinopec fell 3.7 percent to
HK$7.84 and China's second-largest oil refiner PetroChina dropped
3 percent after crude prices struck a record above $123 a barrel,
further squeezing their margins as domestic fuel prices are
capped by the government.

Sectors sensitive to high fuel costs, such as airlines, also
fell.

Flag carrier Air China (0753.HK: Quote, Profile, Research, Stock Buzz) fell as much as 5 percent
before closing the morning down 3.3 percent to HK$5.66, while
China Southern (1055.HK: Quote, Profile, Research, Stock Buzz) dropped 3.6 percent and China Eastern
(0670.HK: Quote, Profile, Research, Stock Buzz) fell 2.9 percent.

Heavyweight China Mobile (0941.HK: Quote, Profile, Research, Stock Buzz) fell 0.75 percent after
the the world's biggest cellular carrier said that it is
interested in the South Africa market but has 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 morning, also
fell 3 percent.

Bucking the broad market trend are oil producers.

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 2
percent before closing the morning up 0.86 percent.

Sinofert (0297.HK: Quote, Profile, Research, Stock Buzz), China's largest distributor of imported
fertilizers, jumped 6.3 percent after parent Sinochem Corp bought
15.5 million of its shares this month.

Hong Kong lender Wing Lung (0096.HK: Quote, Profile, Research, Stock Buzz) rose 1.3 percent after
local media reported that China Merchants Bank (600036.SS: Quote, Profile, Research, Stock Buzz), the
country's fifth-largest bank, had rejoined the bidding for it.
[ID:nHKG179950]
($1=7.8 Hong Kong Dollar)
(Reporting by Judy Hua; Editing by Anne Marie Roantree and
Jonathan Hopfner)