HK shares expected to fall on Wall Street slump

HONG KONG, June 12 (Reuters) - Hong Kong shares are expected to open sharply lower on Thursday, with runaway crude oil prices acting as a catalyst for increased concern over rising inflation and a global slowdown.

"The record high oil prices have raised concern over a global slowdown and we have seen the impact of these fears on Wall Street overnight and in the regional markets this morning," said Andrew To, sales director at Tai Fook Securities.

"The Hang Seng Index will sink below the 23,000 level today. It may open as low as 22,800."

U.S. crude futures reversed a two-day correction with a hefty $5.07 a barrel gain on Wednesday. It settled at $136.38 a barrel [nN11278293] due to falling U.S. crude investories and a sudden halt in the the dollar's rise.

Major U.S. indexes sank 2 percent, beaten by the crude oil price surge and reports that Lehman Brothers LEH.N may seek to raise more capital. Lehman stock has plunged more than 30 percent in four straight days of losses [nN11277578].

Other major Asian indexes also opened lower, tracking the Wall Street slump and the falling dollar.

The Hang Seng Index .HSI closed 0.21 percent lower at 23,327.60 on Wednesday after gains in Cathay Pacific (0293.HK) and Chinese telecom companies were outpaced by losses in some H-shares.

Turnover fell to HK$62.91 billion from Tuesday's HK$82.16 billion as investors waited for cues on the interest rates direction from the U.S. Fed and market-boosting measures from Beijing.

STOCKS TO WATCH

*Offshore oil producer CNOOC (0883.HK) which has been on a roll on the record oil price rally is seen extending gains.

But Sinopec Corp (0386.HK), Asia's biggest refiner, will pullback further as the sky-high crude oil prices combined with the regulated prices of refined products in the domestic market is expected to erose it refining margins.

*Cathay Pacific (0293.HK) which was one of the major gainers on the HSI on Wednesday is likely to take a beating on Thursday after the oil price surge mauled U.S. airlines overnight.

*China Merchants Bank (3968.HK), the nations' sixth largest lender, said it plans to issue 30 billion yuan ($4.34 billion) of subordinated bonds. The announcement comes after CM Bank agreed to buy a majority stake in Hong Kong's Wing Lung Bank 0096.HK in a $4.66 billion deal.

CM Bank's fund raising announcement also follows PetroChina's plans to raise upto 60 billion yuan through corporate bonds.

*Mainland restaurant chain operator Little Sheep (0968.HK) will make its debut on the Hong Kong exchnage today. The hot pot restraurant operator priced its issue at the middle of the range at HK$3.18.

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INSTRUMENT LAST PCT CHG NET CHG S&P 500 .SPX 1,335.49 -1.69% -22.950 USD/JPY JPY= 106.91 0.09% 0.100 10-YR US TSY YLD US10YT=RR 4.075 -- 0.000 SPOT GOLD XAU= $880.40 0.10% 0.850 US CRUDE CLc1 $136.55 0.12% 0.170 DOW JONES .DJI 12083.77 -1.68% -205.99 ASIA ADRS .BKAS 154.33 -1.58% -2.48 -------------------------------------------------------------> Wall St sinks as oil reapproaches high, BUD up late [.N] > Oil jumps $5 as U.S. stockpiles fall [O/R] > US dollar down as uncertain Fed-ECB rate outlook weighs [USD/] > TREASURIES-Prices up as stock drop boosts bid for bonds [US/] > Gold extends gains on soft dollar, firm oil [GOL/] > SE Asian Stocks-Philippines leads losses, Singapore gains[.SO] (Reporting by Parvathy Ullatil; Editing by Ken Wills)