Hong Kong stocks fall on China inflation concerns

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

HONG KONG, May 9 (Reuters) - Hong Kong stocks fell 1.6
percent on Friday on growing concerns over the outlook for
China's economy after Vice Premier Wang Qishan said inflation was
the country's biggest economic problem.

Wang reaffirmed that the government would stick to a tight
monetary policy to help cool an economy that has grown by
double-digits for five years, helping to push Shanghai stocks
.SSEC nearly 2 percent lower. [ID:nSHA164993]

His comments came as data showed that China's producer price
inflation rate edged up to 8.1 percent in April from 8.0 percent
in March as rises in food, energy and raw material costs pushed
up factory-gate prices at the fastest rate since late 2004.
[ID:nPEK203221]

"The market moved so sharply in the middle of the morning
trade, I think it is just a delayed reaction to this news," said
SG Securities trader Andrew Clarke.

"This is a particularly bullish statement that the government
is determined to fight inflation by tight monetary policy," he
said, adding that another interest rate hike was likely soon.

Sources have said that China's consumer price inflation in
the year to April is likely to have risen to a near 12-year high
of 8.5 percent. The data is due on Monday. [ID:nL08920747]

The benchmark Hang Seng Index .HSI had dropped 1.62 percent
to 25,038.06 by midday, led by heavyweight HSBC (0005.HK: Quote, Profile, Research) after
Morgan Stanley downgraded it to underweight from equal-weight on
the U.S. debt crisis. [ID:nHKG221091]

The China Enterprises Index of Hong Kong-listed mainland
companies , or H shares, fell 1.95 percent to 13,616.44.

Mainboard turnover was flat at HK$44.7 billion ($5.7
billion).

Shares in Asia's top oil refiner Sinopec (0386.HK: Quote, Profile, Research) tumbled
4.6 percent to HK$7.51 and China's second-largest oil refiner
PetroChina (0857.HK: Quote, Profile, Research) dropped 3 percent after crude prices struck
a record above $124 a barrel, further squeezing their margins as
domestic fuel prices are capped by the government.

Manulife Financials (0945.HK: Quote, Profile, Research)(MFC.TO: Quote, Profile, Research) fell 5 percent after
its net income fell to C$869 million in the first quarter, from
C$986 million in the year-ago period, due to sharp declines in
the U.S. and Asia equity markets.

Heavyweight China Mobile (0941.HK: Quote, Profile, Research) fell 1.22 percent. But
other Chinese telecom plays rose on speculation that an industry
reshuffle could come soon.

Mobile carrier China Unicom (0762.HK: Quote, Profile, Research) rose nearly 3 percent
before closing the moring up 0.97 percent at HK$17.04, while
fixed-line operator China Telecom (0728.HK: Quote, Profile, Research) jumped more than 3
percent before ending the morning up 0.18 percent.
($1=7.8 Hong Kong Dollar)
(Reporting by Judy Hua; Editing by Anne Marie Roantree)