* China Railway Group slammed on forex loss revelation * China Overseas Land bucks on government support measures * HSI drops 50.5 pct this year, 10.2 pct in three sessions
By Parvathy Ullatil and Jun Ebias
HONG KONG, Oct 23 (Reuters) - Hong Kong shares trimmed losses to 3.6 percent on Thursday on hopes of further succour for the markets from the U.S. government, but the main index closed below 14,000 points to take losses this year to more than 50 percent.
Energy stocks such as PetroChina (0857.HK: Quote, Profile, Research, Stock Buzz) plunged after crude oil prices stayed weak, while resources shares such as China Shenhua Energy (1088.HK: Quote, Profile, Research, Stock Buzz) fell on fears of slowing demand.
"There was some some late bargain hunting as U.S. stock futures were seen higher. There is a lot of talk in the market, including a likely Fed rate cut," said Andrew Sullivan, sales trader with Main First Securities.
Investors focused on slackening corporate bottomlines and trading losses related to currency hedging after a string of dismal quarterly earnings and forex loss warnings this week.
"People are looking at companies to see of they hold derivatives. While some companies have good reason to hold derivatives, others who have invested in them with, say, their IPO proceeds are now being looked at with suspicion."
Jiangxi Copper (0358.HK: Quote, Profile, Research, Stock Buzz) fell 7.9 percent to a two-year closing low of HK$3.83 on concerns about its bleak earnings outlook and an investment loss in the third quarter.
But China Overseas Land (0688.HK: Quote, Profile, Research, Stock Buzz) dodged the downdraft, advancing 8.1 percent after the government announced measures on Wednesday to boost flagging property prices on the mainland. Guangzhou R&F Properties (2777.HK: Quote, Profile, Research, Stock Buzz) climbed 4.6 percent.
The benchmark Hang Seng Index .HSI closed 506.11 points lower at 13,760.49 after dropping 6 percent earlier on Thursday. The index has shed 50.5 percent so far this year and lost 10.2 percent in three sessions including Thursday's slide.
"Even after a series of concerted efforts by governments to stabilise the financial markets, it seems that the global economy is still under pressure and will likely slip into a recession," said Daniel Chan, senior investment strategist at DBS Bank.
"In Hong Kong, some hedge funds continue to sell their assets to raise more money. The HSI will likely test lower levels, trading between 13,000 to 15,000 until the end of the year."
HSBC Holdings (0005.HK: Quote, Profile, Research, Stock Buzz), Europe's largest bank and the most heavily weighted stock on local blue-chip index, slid 3.1 percent to HK$100.6. The stock fell below HK$100 for the first time in more than five years earlier in the day.
But HSBC has still outperformed the broad market, falling 24 percent since the start of the year.
The China Enterprises Index .HSCE of top locally listed mainland Chinese companies was down 4.4 percent at 6,403.15.
Shares of China Railway Group (0390.HK: Quote, Profile, Research, Stock Buzz) plunged 7.1 percent after the biggest railway and construction builder on the mainland disclosed 1.9 billion yuan ($278 million) in foreign exchange losses for the first nine months of 2008. [ID:nHKG26975]
Merrill Lynch cut its rating on the stock to underperform from buy after slashing its 2008 earnings estimate by 61 percent to 1.5 billion yuan owing to the forex loss.
The stock shed more than a fifth of its market value on Wednesday on speculation of the forex losses.
China Railway Construction Corp (1186.HK: Quote, Profile, Research, Stock Buzz) fell 11.1 percent at the open after it reported a 320 million yuan foreign exchange loss for the third quarter. It scaled back losses to close 2.5 percent lower after analysts said the market had overreacted to the relatively small loss.
Energy stocks plunged after crude oil prices stayed weak on a strong U.S. dollar and signs of a slowdown in demand from China.
Asia's largest oil and gas producer, PetroChina (0857.HK: Quote, Profile, Research, Stock Buzz), fell 5.1 percent to HK$5.45, its lowest close in three years.
Offshore specialist CNOOC (0883.HK: Quote, Profile, Research, Stock Buzz) tumbled 8.1 percent, taking its total loss this year to more than 60 percent.
Coal miner China Shenhua Energy (1088.HK: Quote, Profile, Research, Stock Buzz) plunged 7.7 percent as analysts warned of lower demand for the commodity amid a global recession.
Smaller rival China Coal (1898.HK: Quote, Profile, Research, Stock Buzz) plummeted 7.3 percent.
Shares in Huaneng Power International (0902.HK: Quote, Profile, Research, Stock Buzz), China's top listed electricity power supplier, fell 12 percent on Thursday as analysts said they did not expect it to return to profit in 2009.
Citigroup analyst Pierre Lau expects Huaneng to post a loss of more than 3 billion yuan ($438.8 million) in 2008 and also expects a net loss for 2009.
Aluminum Corp of China (2600.HK: Quote, Profile, Research, Stock Buzz), the third largest alumina producer in the world, dropped 8.8 percent after it said it aimed to cut production by 18 percent annually as prices of the metal plummet.
(Reporting by Parvathy Ullatil; Editing by Anne Marie Roantree)
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