HK shares set to fall on weak U.S., China markets

HONG KONG, June 18 (Reuters) - Hong Kong shares are expected to open slightly lower on Wednesday after a choppy session on Wall Street and continued weakness in the mainland China markets.

Buying interest is likely to remain subdued, a day after the mainboard turnover in Hong Kong dropped to its lowest level in more than a year.

U.S. shares fell on Tuesday after Goldman Sachs (GS.N) warned that U.S. banks would have to raise as much as $65 billion in capital to shore up balance sheets weakened by the sub-prime mortgage crisis. [ID:nN17383926]

Mainland markets sunk to a 15-month low on Tuesday, weighed down by fears of rising inflation.

"The markets will trade sideways again today, with the main index shuffling around the 23,000 level. With a lower close on Wall Street and caution about China markets, investors have no incentive to buy," said Ben Kwong, COO with KGI Asia Ltd.

In more encouraging news, oil prices fell overnight with U.S. crude oil settling down at $134.01 per barrel, a sharp correction from Monday's intra-day high of $139.89 as Saudi Arabia prepared to boost output to its higest in decades.

Crude prices slipped further in Asian trade on Wednesday, hovering around $133.40.

Refiner Sinopec Corp (0386.HK), which bucked Tuesday's directionless market to rise sharply, is expected to add to its gains.

The Hang Seng Index closed on Tuesday barely changed at 23,057.99, as a sharp drop in the Chinese bourses and lacklusture trade in regional markets kept investors from buying.

Continuing in the long line of companies to cancel or pare the size of their initial public offerings, sporting shoe retailer Xdlong International has cut its planned IPO in half to US$150 million due to poor market sentiment, the South China Morning Post said.

STOCKS TO WATCH

* China Southern Airlines (1055.HK), Air China (0753.HK), and China Eastern (0670.HK) were each given four slots a week for flights to Taiwan, while Hainan Airlines, Shanghai Airlines and China Southern subsidiary Xiamen Airlines each operate two weekly flights to Taiwan. The services will begin on July 4, according to the Civil Aviation Administration of China.

* Country Garden (2007.HK) chairman Yeung Kwok Keung is closed to finalising a deal to buy a 75 percent stake in Shaw Brothers 0080.HK from Sir Run Run Shaw that will give him ultimate control of the city's broadcaster TVB (0511.HK), the South China Morning Post said, quoting sources. * Sinotrans Shipping Ltd (0368.HK) and Sinotrans Ltd (0598.HK) said late on Tuesday their parent company, Sinotrans Group, was considering a possible merger with China Yangtze Transportation (Group) Corp.

* China Life Insurance Co Ltd (2628.HK) said its unaudited accumulated premiums income for the first 5 months of 2008 amounted to 151.5 billion yuan

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