HK shares expected to extend losses on US, China

HONG KONG, June 11 (Reuters) - Hong Kong shares are expected to open lower on Wednesday, extending the previous day's sharp losses, as investors remain cautious about the state of the world's largest economy following the Fed's hawkish signal on interest rates.

Shares in chip-makers and software technology companies fell on Wall Street after Federal Reserve chairman Ben Bernanke said on Monday he would strongly resist rising inflation expectations, which was interpreted by the market as a signal for higher rates.

The Fed has been slashing rates through since September 2007 in a bid to boost consumer spending and avert recession.

"The selling pressure will continue as investors still lack confidence in the U.S. economy," said Conita Hung, head of equity markets with Delta Asia Securities.

"Also, the mainland markets are unlikely to recover till they see some stimulus measures from the government."

Mainland bourses fell the most in a year on Tuesday after Beijing took measures to curb liquidity and arrest inflation.

In April, the then down-in-the-dumps market was rescued by the government's decision to cut stamp duty on share transactions. The Shanghai Composite Index recovered over 9 percent the following day. Investors are now back to holding their breath for more market-boosting measures from Beijing.

The Hang Seng Index .HSI closed 4.21 percent lower on Tuesday at 23,375.52, its lowest level in 10 weeks. Most blue chips dropped further in the extended 10-minute closing auction as investors scurried to cover short positions.

The main index is expected to move between 22,500 and 23,200 today.

STOCKS TO WATCH

* CNOOC 0883.H, which was trading higher for most of Tuesday, is likely to fall further after crude oil prices fell for a second day running on expectations of a rate hike in the U.S.

* Cosco Pacific (1199.HK) said the huge disparity between the reported values of its bid to run and upgrade Greece's Piraeus Port (OLPr.AT) stemmed from a difference in accounting methods and the inclusion of certain fees [ID:nHKG343844]. Cosco, which was suspended from trading on Tuesday, pending an announcement about its Piraeus bid, will resume trading today.

The stock took a beating last week when the company announced it was submitting a bid valued at about 500 million euros, far below the 4.3 billion euros reported earlier.

* CITIC International Financial Holdings Ltd 0183.HK (CIFH) said on Wednesday its major shareholder CITIC Group planned to privatise the company by offering one China CITIC Bank Corp Ltd (0998.HK) (CNCB) H share and HK$1.46 cash for each CIFH share.

Based on the closing price of HK$5.44 per CNCB share on June 2, the offer represented a 21 percent premium over the closing price of HK$5.70 per CIFH share.

Spanish bank BBVA (BBVA.MC) had said earlier in June that it had agreed to raise its stakes in Chinese bank CITIC and its Hong Kong-listed international arm CIFH for about 800 million euros ($1.25 billion).