HK shares end down for 4th straight week; Ping An drops

* HSI finishes lower for fourth week in a row

* Ping An dives 9.7 pct on Fortis rumours

* China Mobile slides on regulatory uncertainties

* China Cosco tumbles tracking global freight index

(Updates to close)

By Parvathy Ullatil

HONG KONG, Sept 26 (Reuters) - Hong Kong shares dropped 1.3 percent on Friday to finish lower for the fourth straight week, as the U.S. bank bailout plan hit a wall, while Ping An (2318.HK: Quote, Profile, Research, Stock Buzz) was battered by rumours about trouble at Fortis (FOR.BR: Quote, Profile, Research, Stock Buzz) in which it holds a 5 percent stake.

U.S. stock futures dropped after the $700 billion rescue for the U.S. financial system had fallen into chaos on Thursday and U.S. authorities closed Washington Mutual and sold its some of its assets to JP Morgan Chase & Co. [nSP65387]

Shares in China's second-biggest insurer, Ping An Insurance (2318.HK: Quote, Profile, Research, Stock Buzz), dived 9.7 percent to HK$47.50 on Friday on talk that Fortis (FOR.BR: Quote, Profile, Research, Stock Buzz) sought help from a rival bank to shore up its liquidity. [nHKG272806]

The company said it had not made any provisions against possible losses from its investment in the Belgian-Dutch financial group, but it did not rule out having to do so later.

"The impact on value is relatively small because it has already been largely mark-to-market through the balance sheet, but the impact on earnings if they are forced to take an impairment could be relatively large," said Christopher Esson an analyst at Credit Suisse.

Fortis saw its shares plunge by more than a fifth to a 14-month on Thursday even as the company categorically denied the rumours that the Dutch Central Bank had asked rival Rabobank to support its liquidity position. [ID:nLP49229] The stock continued to slide on Friday.

The benchmark Hang Seng Index .HSI ended down 252.34 points at 18,682.09. The Index fell 3.3 percent this week, taking its total losses so far this month to over 12 percent.

Mainboard turnover rose slightly to HK$55 billion ($7.1 billion) from HK$52.2 billion at mid-day on Thursday.

"JP Morgan's buyout of Washington Mutual's deposits shows that while there is frailty in the financial system, the solutions can be found within the system too," said Andrew Sullivan, sales trader with Main First Securities.

"We still need Congress to approve the $700 billion bailout plan but it's good see that deals can still happen in this market if the price is right."

The China Enterprises Index .HSCE of top locally listed mainland Chinese firms fell 1.8 percent to 9,589.01.

Shares in Asia's largest wireless carrier, China Mobile (0941.HK: Quote, Profile, Research, Stock Buzz), extended the previous session's losses to fall another 3.2 percent as investors fretted over regulatory policies that are seen favouring smaller players over the market leader.

China Mobile's parent is setting aside 50 billion yuan to help pay for the restructuring of the mainland telecom industry that is aimed at strengthening the weaker industry players, media reports in China and Hong Kong said.

China Unicom (0762.HK: Quote, Profile, Research, Stock Buzz) closed 0.7 percent higher while China Netcom (0906.HK: Quote, Profile, Research, Stock Buzz) gained 0.6 percent.

China's largest shipping conglomerate, China Cosco (1919.HK: Quote, Profile, Research, Stock Buzz), tumbled 11.3 percent after the global freight index dropped sharply. The Baltic Dry Index .BADI fell 7.3 percent on Thursday due to slowing global demand for commodities.

Air China (0753.HK: Quote, Profile, Research, Stock Buzz), China's largest international airline jumped 1.4 percent while China Southern Airlines (1055.HK: Quote, Profile, Research, Stock Buzz) rallied 4.7 percent as oil prices fell more than $3 a barrel on Friday amid stalled talks over the U.S. bank rescue package.

(US$1=HK$7.8)