Hong Kong shares hit 4-mth low, HSCE breaks below key technical support

Fri Apr 5, 2013 7:35am BST

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* HSI -2.6 pct, H-shares -3.1 pct, China shut

* HSCE breaks below 200-day MA for the 1st time since November

* BoJ radical easing triggers HK outflows

* Airlines sector slump as China bird flu fears escalate

By Clement Tan

HONG KONG, April 5 (Reuters) - Hong Kong shares tumbled to a four-month low on Friday, led by airlines as fears of a bird flu outbreak sparked a broad selloff, with a benchmark index breaking below a key chart support, pointing at further losses ahead.

Traders said the losses was exacerbated by an exit of funds from the territory following the Bank of Japan's unprecedented aggressive monetary easing announced on Thursday, a day Hong Kong markets were shut for a public holiday.

Mainland China stayed shut on Friday for a public holiday and will resume trading on Monday.

At 0542 GMT, the Hang Seng Index was down 2.6 percent at 21,747.2 points, its lowest since early December.

The China Enterprises Index of the leading Chinese listings in Hong Kong dived 3.1 percent to 10,429.5, breaking below its 200-day moving average, now at about 10,508.9, for the first time since Nov. 21.

Losses in Hong Kong came as Japanese shares jumped to near five-year highs and government bond prices rose sharply, with the long-end of the yield curve inverting as the Tokyo Stock Exchange twice halted trade in Japanese government bond futures.

The two Hong Kong indexes are now down 2.5 and 4.4 percent on the week, respectively. At midday, bourse turnover was at its heaviest in almost two weeks with short selling interest accounting for 10.6 percent of total turnover.

"Everything is combining today to hurt the market," said Alfred Chan, chief dealer at Cheer Pearl Investment in Hong Kong. "The bird flu issue is at the top of people's minds now."

Chinese authorities were slaughtering birds at a poultry market in the financial hub Shanghai as the death toll from a new strain of bird flu mounted to six on Friday.

The strain does not appear to be transmitted from human to human but authorities in Hong Kong raised a preliminary alert and said they were taking precautions at the airport. Vietnam banned imports of Chinese poultry.

Chinese airlines were among the biggest percentage losers on the day. Air China slumped 12 percent, China Southern Airlines dived 10 percent, while China Eastern Airlines slid almost 8 percent.

Hong Kong's Cathay Pacific Airways fell 4.2 percent to its lowest since September.

Chinese property stocks slumped after the 21st Century Business Herald newspaper reported on Thursday that about 20 projects in Beijing have been banned from an online property registration system as authorities step up efforts to tighten restrictions on the high-end housing market.

China Resources Land slid 4.8 percent to its lowest in almost two weeks and now down 1.2 percent on the year after surging 69 percent in 2012.

Chinese oil majors were also hit by lower oil prices, which were on course for their biggest weekly decline in a month. CNOOC Ltd and PetroChina each fell 4 percent and China Petroleum and Chemical Corp (Sinopec) declined 2.9 percent.

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