HK shares seen higher on China vow to aid markets

HONG KONG, June 23 (Reuters) - Hong Kong shares are expected to open higher on Monday, encouraged by a pledge by China's stock market regulator to stabilise the mainland's battered markets. [ID:nSHA212655]

The Shanghai Composite Index .SSEC has tumbled 46 percent this year, mauled by weakening global markets, rising prices of commodities and harsh monetary austerity measures on the mainland. The Hang Seng Index .HSI has given up nearly 18 percent in the same period.

"China has been competing with Vietnam for the title of 'worst performing market this year'. So a statement promising stability from the CSRC will get the Shanghai market to respond," said Howard Gorges, vice chairman of South China Brokerages.

But steep losses on Wall Street on Friday, when the Dow closed below 12,000 for the first time since mid-March on rising oil prices and warnings of more mortgage-related write-downs at banks could cap gains. [ID:nN20394854].

Also on Friday, China's central bank warned of a tougher fight against infaltion, after the mainland raised fuel prices for the first time in eight months, triggering concern over another rate hike.

On Friday,the Hang Seng Index closed 0.23 percent lower at 22,745.60 as speculators booked profits on refiners and power producers after Beijing unexpectedly raised energy prices.

Coal stocks took a beating on the price caps on thermal coal and mainland airlines fell on the prospect of higher jet fuel costs.

STOCKS TO WATCH

* Aluminum Corp of China (2600.HK) is likely to fall sharply after the company said on Friday its first-half profit would fall by at least 50 percent, beaten by mounting production costs and falling prices of its main product, alumina.

The firm known as Chalco blamed power supply and production disruptions because of crippling snowstorms in January, as well as the rise of fuel and raw material costs, for the slippage.

* Yue Yuen Industrial (0551.HK) said it posted a 23.4 percent rise in profit to US$209.3 million in the six months to March 31. The company attributed its improved performance to the ongoing consolidation in the footwear manufacturing industry and strong performance of its greater China wholesale and retail operations. For details please see here

* Telecom companies and equipment makers may get a boost from a report in the South China Morning Post that said China was expected to launch its home-grown 4G mobile technology as early as 2010. The report quoted Shen Donglin, vice-president of wireless technology of Chinese telecommunication equipment maker ZTE.

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INSTRUMENT LAST PCT CHG NET CHG S&P 500 .SPX 1317.93 -1.85% -24.900 USD/JPY JPY= 107.39 0.16% 0.170 10-YR US TSY YLD US10YT=RR 4.168 -- 0.000 SPOT GOLD XAU= 904.1 0.36% 3.250 US CRUDE CLc1 134.82 -0.40% -0.540 DOW JONES .DJI 11842.69 -1.83% -220.40 ASIA ADRS .BKAS 152.41 -3.64% -5.75 -------------------------------------------------------------

MARKETS SUMMARY *Dow ends below 12,000 on oil prices, bank fears [ID:nN20355206] *Oil leads most markets higher; corn rolls back [ID:nN20185345] *Dollar falls on credit jitters, Fed rate worries [ID:nN20476334] *Treasuries up as stocks fall in safe-haven bid [ID:nN20259166] (Reporting by Parvathy Ullatil; Editing by Anne Marie Roantree) )