HK shares seen giving up gains after Wall St slump

HONG KONG, July 10 (Reuters) - Hong Kong shares are expected to fall on Thursday as cautious investors take to the sidelines after steep losses in U.S. markets and a recovery in crude oil prices after a two-day slide.

U.S. stocks tumbled on Wednesday, dragging the S&P 500 into a bear market, as worries about more credit losses hurt financial companies and Cisco Systems led technology shares lower after its CEO raised fears of an extended economic downturn.

All three major stock indices fell more than 2 percent.
"Investors will go back to fretting about the U.S. credit crisis and likely weak corporate earnings today after Wall Street's overnight slump," said Alex Tang, research director with Core Pacific Yamaichi International.

Tang expects the main index to find support at the 21,000 level today and trend lower to 20,600 in the short term. Hong Kong shares rebounded 2.8 percent on Wednesday, recovering from the previous session's steep fall, after the U.S. Fed said it may keep open a lifeline for Wall Street banks battered by the credit crisis.

STOCKS TO WATCH

* Air China won approval from the securities regulator to make a previously announced offer of up to 400 million additional A shares, the flag carrier said on Wednesday.

The issue, equivalent to about 3.3 percent of the company's share capital, must be conducted within six months, it said in a brief statement.

At Wednesday's closing price for Air China's shares of 10.39 yuan, the offer could raise as much as 4.16 billion yuan ($607 million).

Plastics maker Bestway International Holdings Ltd has agreed to pay a combined HK$6.98 billion ($894.7 million) for two Mongolian resource prospectors. The first, with a price tag of HK$1.28 billion, has rights to a polymetallic mine covering roughly 4.88 square kilometres. The second, costing HK$5.7 billion, has rights to a coal mine covering an area no less than 200 square metres. For more details, see here

* China's fifth largest bank, Bank of Communications will sell 3 billion yuan worth of yuan-denominated bonds in Hong Kong starting next week, the South China Morning Post quoted unnamed sources as saying. It would be the first yuan bond issue by a Chinese bank this year. ---------------MARKET SNAP SHOT @ 23:00 GMT ------------------

INSTRUMENT LAST PCT CHG NET CHG S&P 500 .SPX 1,244.69 -2.28% -29.010 USD/JPY 106.87 0.08% 0.090 10-YR US TSY YLD 3.809 -- 0.000 SPOT GOLD $927.60 -0.02% -0.150 US CRUDE CLc1 $135.96 -0.07% -0.090 DOW JONES .DJI 11147.44 -2.08% -236.77 ASIA ADRS .BKAS 143.73 -1.47% -2.15 -------------------------------------------------------------> > SE Asian Stocks-Firmer as oil recoils, but Iran weighs [.SO] > Iran saber-rattling sends dollar tumbling broadly [USD/] > TREASURIES-Bonds gain as stocks fall on financials worry [US/] > Gold firms on Iran missile launch, rise in oil [GOL/] > Oil pulls out of nose-dive as US supplies drop [O/R] > US STOCKS-S&P 500 plunges into a bear market [.N] (Reporting by Parvathy Ullatil; Editing by Anne Marie Roantree)