HK shares to take a hit on Wall street,crude prices

HONG KONG, June 27 (Reuters) - Hong Kong shares are expected to open lower on Friday as a sharp drop on Wall Street and record high oil prices compounded fears of a greater slowdown in the global economy. U.S. stocks plunged 3 percent on Thursday, with the Dow sliding about 360 points to a 21-month low as oil hit a record high and Wall Street powerhouse Goldman Sachs urged investors to sell bank and automaker shares, escalating concern about the outlook for profits. [ID:nN26287271]

Oil surged above $140 a barrel in New York trading on supply and inflation worries in a weak dollar-denoninated commodity market. [ID:nN26302551] "In addition to the sharp drop on Wall Street and high oil prices, investors are also fretting about a likely interest rate hike in China," said Alex Tang, research director, Core-Pacific Yamaichi International.

Tang expects the Hang Seng Index .HSI to dip below the 22,000 level today and test the 21,000 level in the short term.

"We hit a low of 20,600 in mid-March, and given the deteriorating market conditions, it is difficult to say that we may not dip that low in the short-term," he said.

On Thursday, Hong Kong shares reversed early gains to close 0.8 percent lower at 22,455.67, hurt by losses in retail-focused Li & Fung (0494.HK) and cellphone maker Foxconn (2038.HK) on broker downgrades as U.S. consumption falters.

STOCKS TO WATCH

* Offshore oil producer CNOOC (0883.HK), which fell 1.9 percent on retreating oil prices on Thursday, is expected to jump right back into its recent rally as global crude prices resumed their record-breaking run.

Refiners and airline companies will be hit hard with surging fuel costs seen eating into their margins.

* Export-oriented companies, including Li & Fung (0494.HK) and Foxconn International Holdings (2038.HK), are likely to extend Thursday's sharp losses as investors lose confidence in the U.S. economy.

Li & Fung tumbled nearly 7 percent on Thursday, while Foxconn dropped 5.3 percent.

* Standard Chartered (2888.HK) indicated on Thursday its first-half profit could rise at least 18 percent despite additional write-downs.

But shares in the bank, which generates about two-thirds of its revenue in Asia, fell in London after it confirmed a potential threat from rising inflation in its key Asian markets.

* Gold miners may get a boost as prices of the precious metal touched a 1-month high on a weakening U.S. dollar.

* Credit Suisse upgraded China COSCO (1919.HK) to outperform from neutral on Friday, expecting the country's largest shipping firm to turn in strong first-half results after locking in higher rates for transporting resources to the world's fourth largest economy

* Sinopec Corp (0386.HK) (600028.SS), Asia's top refiner, said on Thursday it would spend 1.56 billion yuan ($227.3 million) to buy oilfield maintainence assets from its parent company.

The assets, located across the vast country and currently owned by Sinopec Group, are valued at about 2.3 billion yuan with 742.85 million yuan of debt in total, Sinopec Corp said in a stock filing to the Shanghai Stock Exchange.