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).

* Hutchison Telecommunications (2332.HK) which said on Tuesday it will launch the new 3G Apple iPhone in Hong Kong on July 11 is expected to extend gains after defying the broad market and cloing higher yesterday.

* Shares in local property developers are expected to drop further after Tuesday's sharp losses as a likely interest rate hike in the U.S. would also push local rates higher as the local currency is pegged to the greenback.

Property stocks which had rallied sharply in the last four months of 2007, since the Fed began to slash rates, have given up some of their gains so far this year.

----------------------MARKET SNAPSHOT @ 2306 GMT ------------

INSTRUMENT LAST PCT CHG NET CHG S&P 500 .SPX 1358.44 -0.24% -3.320 USD/JPY JPY= 107.33 -0.06% -0.060 10-YR US TSY YLD US10YT=RR 4.0968 -- 0.000 SPOT GOLD XAU= 868.05 0.20% 1.700 US CRUDE CLc1 131.57 0.20% 0.240 DOW JONES .DJI 12289.76 0.08% 9.44 ASIA ADRS .BKAS 156.81 -1.96% -3.14 -------------------------------------------------------------> U.S. STOCKS-Market ends mostly lower on rate-hike concern [.N] > Oil falls $3 on demand worries, dollar rebound [O/R] > FOREX-Dollar rallies as Bernanke focuses on inflation [USD/] > TREASURIES-Prices fall as investors anticipate rate hike [US/] > Gold ends 3 pct lower on down oil, rate hike bet [GOL/] > SE Asian Stocks-Fall on inflation worry [.SO]

(Reporting by Parvathy Ullatil; Editing by Anne Marie Roantree)