Hong Kong stocks fell by the most in a week after oil prices surged to the highest level since September 2008, raising concern more expensive energy costs will derail global economic growth.

Cathay Pacific Airways Ltd declined 2.5 percent after crude prices rallied above $100 a barrel on concern turmoil in the Middle East will spread from Libya to Iran. China Southern Airlines Co sank 3.5 percent. Sands China Ltd tumbled 6.2 percent after its majority shareholder said it faced US investigations.

The Hang Seng Index (HSI) slid 1.5 percent to 23048.66 at the close. All but three stocks fell in the 45-member gauge. The Hang Seng China Enterprises Index lost 0.9 percent to 12507.02.

"If we have oil prices above $100 a barrel for another two or three months," there is a risk of a big dent in consumer spending, Hans Goetti, chief investment officer for Asia at Finaport Investment Intelligence, told Bloomberg Television. "If you have an oil shock and rising oil prices, we always had a recession, at least in previous cycles."

Shipping and airlines declined after surging oil prices dampened their profit outlook. Cosco Holdings Co fell 1.3 percent to HK$8.20, and Cathay Pacific dropped 2.5 percent to HK$17.86. Air China Ltd declined 2.6 percent to HK$7.24.

Crude oil for April delivery advanced as much as 1 percent to $100.64 a barrel in New York. Futures on Tuesday surged 2.7 percent to the highest level since Sept 30, 2008, as Libyan rebels braced for renewed clashes with forces loyal to leader Muammar Qaddafi and after Al Arabiya television reported Iranian protesters clashed with security forces in Tehran.

Shares in the gauge traded at an average 12.6 times estimated earnings Tuesday, according to data compiled by Bloomberg.

Among stocks that rose, BYD Co surged 9.2 percent to HK$33.30 after the Financial Times reported it plans to start selling electric and hybrid cars in Europe by the end of next year, citing Wang Chuanfu, the company's chairman.

Futures on the HSI lost 1.8 percent to 22940.

Bloomberg

(HK Edition 03/03/2011 page3)