Stocks drop as US fuels concerns

Stocks fell on Monday, driving the Hang Seng Index (HSI) to its biggest drop in two weeks after a report showing US employment growth stalled last month fueled concern the world's largest economy may slip into a recession.

The HSI slipped 2.95 percent to 19616.43 at the close, the biggest drop since August 19, after a mainland services index also fell to a record low. All but one of the 46 stocks on the gauge fell. The Hang Seng China Enterprises Index slid 3.43 percent to 10299.17.

In New York, the Standard & Poor's 500 Index declined 2.5 percent on September 2 after a report showed US payrolls were unchanged in August, the weakest reading since September 2010.

The median forecast in a Bloomberg survey called for an increase of 68,000. US markets was closed on Monday for a public holiday.

Esprit dropped 3.2 percent to HK$19.02. Cathay Pacific Airways Ltd lost 2.5 percent to HK$15.34.

Jiangxi Copper retreated 4.3 percent to HK$21, Aluminum Corp fell 3.5 percent to HK$4.92 and PetroChina Co dropped 3.2 percent to HK$9.36. Cnooc tumbled 9 percent to HK$13.84 after oil leaks at a field operated by partner ConocoPhillips forced the company to cut its output estimate.

Hong Kong property stocks slid on Monday after Land Registry data on September 2 showed that the number of housing transactions declined for the eighth straight month in August amid higher home-loan interest rates and government measures to curb prices.

Henderson Land Development Co dropped 4 percent to HK$43.15. Rival Sun Hung Kai Properties Ltd sank 3 percent to HK$104.

Futures on the HSI slid 2.6 percent to 19530. The HSI Volatility Index climbed 12 percent to 34.47.

Industrial & Commercial Bank fell 4.7 percent to HK$4.88, leading declines among mainland lenders after the China Securities Journal said new reserve requirements for 14 listed banks may increase by about 700 billion yuan ($110 billion) over the next six months. China Construction Bank Corp lost 3.7 percent to HK$5.53.

Hang Seng eyes relief measures

Hong Kong's government may announce additional inflation relief measures in October when Chief Executive Donald Tsang gives his annual policy address as the city is deprived of monetary independence because of its currency peg to the US dollar, Joanne Yim, chief economist at Hang Seng Bank, said in a report on Monday.

PetroChina to reopen crude unit

PetroChina Co plans to resume production at a 200,000 barrel-a-day crude distillation unit at its Dalian refinery in one or two days.

The company is filling the unit with feedstock, and the facility will continue producing during the coming days, a refinery official said by phone from the northern city, declining to be identified because of internal policy.

PetroChina shut the crude unit, accounting for half the plant's capacity, on July 16 after a fire. The company, which originally planned to restart the unit around August 26, postponed it to ensure safe operation, said the official.

The Dalian plant may not be able to meet its annual oil processing target of 17.8 million metric tons set by the parent company because of the unexpected shutdown of the unit, the official said.

Bloomberg - Reuters

(HK Edition 09/06/2011 page2)