HK stocks set to gain on easing credit-market woes

HONG KONG, July 17 (Reuters) - Hong Kong stocks are expected to rise on Thursday after surprisingly strong earnings from a big U.S. bank and a drop in oil prices eased worries over the impact of credit losses and soaring fuel costs on company profits.

Financial shares are likely to track strong gains in overseas banking stocks after Wells Fargo (WFC.N), the No. 5 U.S. bank and a big mortgage lender, reported earnings that beat analyst estimates.

But a report by CLSA saying Bank of China (3988.HK) (601988.SS) may hold roughly $20 billion worth of bonds issued by troubled U.S. mortgage lenders Fannie Mae (FNM.N) and Freddie Mac (FRE.N) could cap gains. [ID:nHKG96256]

"It's time to bargain hunt since the stocks have been seriously oversold and are now very cheap to buy," said Francis Lun, general manager from Fulbright Securities.

"The weakest links like banks, refiners and airlines can have a good chance to rebound after the recent sell-off," Lun said, adding the index could shoot up some 500 points before meeting resistance.

Hong Kong shares eked out a small gain and closed up 0.23 percent at 21,223.50 on Wednesday after opening below the key 21,000 support level for the first time since August 2007.

STOCKS TO WATCH

* Air China (0753.HK) has is eyeing the possible sale of a stake in loss-making carrier Austrian Airlines (AUAV.VI) by the Austrian government, an Austrian magazine quoted the Chinese airline's acting Chairman Kong Dong as saying. [ID:nL16674595]

* China Life Insurance Co (2628.HK) said on Wednesday its unaudited accumulated premiums income for the first six months of 2008 amounted to 182.1 billion yuan. For statement please see here

Ming An (Holdings) (1389.HK) said unaudited accumulated gross insurance premium income of its unit Ming An Insurance Company (China) Ltd amounted to 433.73 million yuan in the first half of 2008. For statement please see here

* Apac Resources Ltd (1104.HK) said on Thursday it would buy a 49 percent stake in an iron ore mining and production joint venture in China for HK$1.2 billion, a deal to be settled partly in cash and by issue of HK$600 million worth of new shares at HK$1 each. For details please see here

* China Sci-Tech Holdings (0985.HK) warned on Wednesday of a potential loss in the second half year ended in March 2008 due to a substantial unrealized loss on the listed securities investment. For full statement please see here Joining the queue for profit warnings, A-Max Holdings (0959.HK) said its results for the year ended in March would be adversely affected by impairment losses on intangible assets resulting from the acquisition of 49.9 percent interests in Greek Mythology in the prior year. For details please see here

* Hopson Development (0754.HK) said it was in preliminary talks regarding a proposed investment in a property development project in Hangzhou Bay New Zone in China's Zhejiang Province but no agreement had yet been reached. For statement please see here ---------------MARKET SNAP SHOT @ 23:50 GMT ------------------

INSTRUMENT LAST PCT CHG NET CHG S&P 500 .SPX 1,245.36 2.51 30.450 USD/JPY JPY= 105.10 0.04 0.040 10-YR US TSY YLD US10YT=RR 3.940 -- 0.002 SPOT GOLD XAU= $960.55 0.15 1.450 US CRUDE CLc1 $134.95 0.26 0.350 DOW JONES .DJI 11239.28 2.52 276.74 ASIA ADRS .BKAS 145.71 3.50 4.93 ---------------------------------------------------------------- SE Asian Stocks-Mostly lower, Thai tumbles on rate hike [.SO]> FOREX-Dollar rebounds from record low vs euro [USD/]> TREASURIES-Bonds fall as safety bid cut by surging stocks [US/]> Gold ends sharply lower as oil tumbles [GOL/]> Oil falls on surprise US stock build, soft demand [O/R]> US STOCKS-Wall St soars on banks' best day in 16 yr [.N] (Reporting by Donny Kwok; Editing by Anne Marie Roantree)