HK stocks fall but CNOOC cheers record oil prices

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

HONG KONG, May 21 (Reuters) - Hong Kong stocks fell 0.7
percent on Wednesday, led by China Mobile (0941.HK: Quote, Profile, Research, Stock Buzz), but a nearly
3 percent jump for oil producer CNOOC (0883.HK: Quote, Profile, Research, Stock Buzz) on the back of
record oil prices helped to trim losses on the blue-chip index.

China COSCO (1919.HK: Quote, Profile, Research, Stock Buzz), the country's largest shipping
conglomerate, slid 6 percent after JP Morgan downgraded the stock
to neutral from overweight on Tuesday on valuation and concerns
over a potential downturn in the shipping cycle in 2009.

Record oil prices had heightened fears over global inflation
and worries about the impact of China's devastating earthquake
were starting to unnerve investors, analysts said.
"I believe global markets have largely completed their latest
round of a rebound and Hong Kong stocks could zig-zag down in the
short-term," said Andrew To, sales director at Tai Fook
Securities.

The benchmark Hang Seng Index .HSI fell below the key
support level of 25,000 points and was down 170.57 points at
24,998.89 by midday, weighed down by local property shares.

The China Enterprises Index of Hong Kong-listed mainland
companies .HSCE, or H shares, dropped 1.41 percent to 13,776.11
after China's key stock index .SSCE lost 1.9 percent.

Mainboard turnover fell to HK$38.12 billion ($4.89 billion)
from HK$45.26 billion by midday on Tuesday.

"The blue chip Hang Seng Index could test the low of 24,600
to 24,700 if U.S. stocks continue to fall tonight," To said.

Index heavyweight China Mobile, the most traded stock on
Wednesday, fell 0.8 percent. But both China Unicom (0762.HK: Quote, Profile, Research, Stock Buzz) and
China Netcom (0906.HK: Quote, Profile, Research, Stock Buzz) rose 1.7 percent each on expectations that
they will benefit from a looming sector restructuring.

China's top cement maker, Anhui Conch (0914.HK: Quote, Profile, Research, Stock Buzz), snapped a
six-session winning streak to fall 5.8 percent. The stock had
risen on hopes of strong demand for cement from reconstruction
efforts after China's earthquake last week.

China National Building Material (3323.HK: Quote, Profile, Research, Stock Buzz) fell for the
second consecutive day, down 5.4 percent, after Citigroup
downgraded the stock to sell from hold on worries about the
profitability of its unit South Cement.

Lenovo (0992.HK: Quote, Profile, Research, Stock Buzz), the world's No. 4 PC maker, rose 3.7
percent ahead of its quarterly results due on Thursday. It was
expected to see a $66 million profit from the sale of its mobile
unit, which could double its earnings in the fourth quarter,
analysts said. [ID:nHKG41418]
(Reporting by Alison Leung; Editing by Anne Marie Roantree)