HK shares seen lower on Wall St losses, China fears

HONG KONG, Aug 19 (Reuters) - Hong Kong shares are seen falling on Tuesday from their lowest close in a year, hurt by overnight losses on Wall Street as credit market worries resurfaced and on concern over inflation and slowing growth in China.

"There is no hope of Hong Kong moving up until the Chinese markets stabilise," said Francis Lun, general manager with Fulbright Securities.

The Shanghai Composite Index .SSEC tumbled 5.3 percent to a new 20-month closing low on Monday, hit by fears that slowing economic growth will erode corporate profits.

U.S. stocks sank on Monday as the prospect of more losses from the mortgage crisis hurt the shares of banks and the two biggest home finance providers, pushing all three major indexes down about 1.5 percent.

Fannie Mae (FNM.N) and Freddie Mac (FRE.N) shed more than 20 percent each after Barron's reported that the U.S. Treasury may need to bail out the home finance giants, which could wipe out shareholders and effectively nationalize the government-sponsored enterprises.

On the plus side, oil fell below $113 a barrel on Monday as fears eased that Tropical Storm Fay would damage major oil and gas infrastructure in the Gulf of Mexico.

Hong Kong stocks fell 1.1 percent to 20,930.67 on Monday to their lowest close in a year, after the latest market boosting comments from Chinese regulators missed their mark and local shares slid on disappointing interim earnings and profit warnings.

STOCKS TO WATCH-

* China Merchants Bank (3968.HK), China's sixth-largest lender, said first-half earnings more than doubled in 2008, topping forecasts due to strong non-interest income growth and reduced credit costs. [ID:nN18487635]. Most analysts expect investors to look beyond 2008 and see a sharp slowdown in earnings at Chinese banks as inflation and growth worries continue to dog the mainland economy.

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*China's biggest airline by fleet size, China Southern Airlines (1055.HK) disappointed investors with a drop in its first half recurring loss and a lower-than-expected 9 percent growth in revenue.

Its net profit increased five fold to 847 million yuan mainly because of a 2.6 billion yuan foreign exchange gain as the currency appreciated 6 percent in the first six months.

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*Anhui Expressway (0995.HK) said late on Monday it planned to issue up to 1.8 billion yuan worth of bonds with warrants in China and up to 331.72 million new A shares will be issued if the bonds and warrants are fully converted. Trading in the company's H-shares whoch were suspended Monday will resume on Tuesday. For statement please see here ----------------------MARKET SNAPSHOT @ 2346 GMT ------------

INSTRUMENT LAST PCT CHG NET CHG S&P 500 .SPX 1278.6 -1.51% -19.600 USD/JPY JPY= 110.1 -0.01% -0.010 10-YR US TSY YLD US10YT=RR 3.8085 -- -0.009 SPOT GOLD XAU= 795.1 -0.43% -3.450 US CRUDE CLc1 113.09 0.19% 0.230 DOW JONES .DJI 11479.39 -1.55% -180.51 ASIA ADRS .BKAS 136.76 -0.31% -0.42 -------------------------------------------------------------> > SE Asian Stocks-Singapore stocks at 20-month low [.SO] > US STOCKS-Wall St tumbles on Fannie, Freddie worries [.N] > Crude dips as storm threat subsidies [O/R] > FOREX-US dollar pauses for breath as commodities rebound [USD/] > TREASURIES-Bonds slide as stock slide sparks safety [US/] > Gold ends near $800; rebound seen after sell-off [GOL/]

(Reporting by Parvathy Ullatil; editing by Keiron Henderson)