HK shares hover in thin volumes; Sinopec soars

* HK stocks vacillate in thin trade

* Sinopec gains as oil prices fall

* China Unicom slides amid fears over earnings

(Updates to midday)

By Jun Ebias

HONG KONG, Oct 17 (Reuters) - Hong Kong shares were little changed on Friday, as lower oil prices lifted Chinese oil refiner Sinopec Corp , offsetting losses for mobile phone operator China Unicom and Chinese financials.

Sinopec gained 6.3 percent after crude oil prices fell more than $6 a barrel to below $70 overnight on rising U.S. inventories and slowing demand amid a global economic crisis.

Mainland mobile phone operator China Unicom shed 5.8 percent on concerns its merger with fixed-line network China Netcom may hurt earnings. The two companies merged on Oct. 15 and on the same day, China Netcom reported a fall in revenue during the first nine months.

Asia's largest oil & gas producer, PetroChina, slid 1.8 percent on fears that lower oil prices may dent profits.

Offshore oil producer CNOOC fell 2.8 percent, adding to its two-day 14.6 percent slide.

The benchmark Hang Seng Index .HSI ended the morning session 4.97 points lower at 15,225.55.

"People are cautious ahead of the weekend in view of the extreme volatility on Wall Street, so the selling pressure remains," said Howard Gorges, vice chairman at South China Securities.

"Earnings estimates are being revised down and these are being priced in by the market. People are reckoning that earnings will be adversely affected by the crisis."

China Merchants Holdings , the nation's largest port operator, climbed 3.7 percent after Merrill Lynch named the stock its top pick among Chinese conglomerates.


Mainboard turnover fell to HK$27.9 billion ($3.6 billion) from HK$30.6 billion at midday on Thursday.

"Trading is directionless and volume is thin," said Castor Pang, strategist at Sun Hung Kai Financial. "Gains in the Chinese stock market this morning encouraged some buying in Hong Kong."

The Shanghai Composite Index .SSEC was up more than 1 percent on Friday on hopes the Chinese government may announce measures to stimulate the economy and prop up shares.

Chinese bank shares fell on worries China's slowing economy may cut demand for loans, trim profits and raise bad loans, said Y.K. Lee, an analyst at Core-Pacific Yamaichi.

China Construction Bank dropped 1.9 percent, while Bank of Communications was down 3.3 percent.

The China Enterprises Index .HSCE of top locally listed mainland Chinese companies rose 0.2 percent to 7,376.48.

Shares in gold miner Zijin Mining dropped 3.9 percent after the price of the precious metal eased further on Friday, following a 6 percent decline overnight as investors fled commodities, including bullion, and opted for the safety of cash.

Tencent , which runs China's largest online messaging community, jumped 2.9 percent after analysts said its earnings would stay resilient even in the face of an economic downturn, owing to its young target audience and low-priced products and services.

(Additional reporting by Parvathy Ullatil; Editing by Anne Marie Roantree)