HK stocks fall 2 pct, property hit by rate fears

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

HONG KONG, May 22 (Reuters) - Hong Kong stocks slid more
than 2 percent on Thursday, with blue chips falling across the
board as record oil prices rekindled fears over inflation and
intensified worries about the health of U.S. economy.

Chinese oil refiners fell after Beijing denied on Thursday
that it would deregulate state-set fuel prices as early as next
month. Rumours about pending oil price rises drove shares of
fuel producers sharply higher on Wednesday. [ID:nPEK160459]

Shares in Sinopec (0386.HK: Quote, Profile, Research, Stock Buzz) fell 3.8 percent and PetroChina
(0857.HK: Quote, Profile, Research, Stock Buzz) lost 2.3 percent.

"Fears that U.S. interest rates may have bottomed out also
weighed on property stocks," said Steven Leung, sales director
at UOB Kay Hian Holdings.

Mid-tier property firm Sino Land (0083.HK: Quote, Profile, Research, Stock Buzz) lost nearly 5
percent and Hang Lung (0101.HK: Quote, Profile, Research, Stock Buzz) fell 4.4 percent after the
Federal Reserve signalled that mounting concerns over inflation
would make further interest rate cuts unlikely. [ID:nN21438129]

Aviation and shipping firms also fell after oil prices hit a
new high above $135 on supply woes. [O/R]

The benchmark Hang Seng Index .HSI was down 517.49 points
at 24,942.80 by midday, weighed down by China Mobile (0941.HK: Quote, Profile, Research, Stock Buzz),
which fell 2.3 percent. The index has dropped 10.3 percent so
far this year.

"Long-term investors are taking a wait-and-see attitude as
they find no reason to rush in," Leung said.

"The Hang Seng is likely to move within the 24,500 and
26,000 points range in the short-term."

The losses in Chinese refiners helped to drag the China
Enterprises Index of Hong Kong-listed mainland companies
.HSCE, or H shares, down 2.3 percent to 13,808.20.

Mainboard turnover improved slightly to HK$47.7 billion
($6.12 billion) from HK$38.12 billion by midday on Wednesday.

The bright spot on Thursday was Fushan International Energy
Group Ltd (0639.HK: Quote, Profile, Research, Stock Buzz), which jumped 12 percent after the company
said it would pay HK$10.53 billion for coking coal mining assets
in China. [ID:nHKG302014]

Mainland airlines were hard hit by high oil prices with
China Eastern (1055.HK: Quote, Profile, Research, Stock Buzz) falling 6.2 percent and China Eastern
(0670.HK: Quote, Profile, Research, Stock Buzz) losing 5.6 percent.

China COSCO (1919.HK: Quote, Profile, Research, Stock Buzz), the country's largest shipping
conglomerate, dropped 8 percent after Credit Suisse cut the
stock to neutral from outperform.

The bank also on Thursday downgraded the Asian dry bulk
shipping sector to market weight from over weight on valuation
and concerns over a potential vessel oversupply in 2009-10.

China Shipping Development (0914.HK: Quote, Profile, Research, Stock Buzz) lost 4.5 percent.

The Dow Jones industrial average .DJI ended down 1.8
percent after the Federal Reserve on Wednesday slashed its U.S.
economic growth forecast for 2008 while raising estimates for
inflation.

"The weakness of U.S. stocks may drag on for a few days and
the could send the Hang Seng index to its resistance of 24,700
points," said Ernie Hon, strategist at ICEA Securities.

"It could test 24,000 points and that will be a good buying
opportunity," he added.
(Reporting by Alison Leung; Editing by Anne Marie Roantree)