HK shares ease 0.5 pct; Foxconn leads with freefall

(Updates to midday)

HONG KONG, June 24 (Reuters) - Hong Kong shares extended losses amid thin volume on Tuesday, with handset maker Foxconn (2038.HK) hitting a 2-1/2-year low on worries that market share losses at client Motorola (MOT.N) will hurt its bottom line.

The world's top contract maker of cellphones plunged 5.8 percent, tracking a 6.3 percent drop in Motorola shares overnight. Motorola, one of Foxconn's major customers, has been beset by declining sales in its home market of North America. [ID:nHKG224671]

"With global handset sales set to fall in the second half, there is talk that Foxconn will have to slash prices of its cellphones to retain existing orders. Investors are quite bearish about the company's profit margins this year," said Castor Pang, strategist with Sun Hung Kai Financial.

Aluminum Corp of China (2600.HK) slid a further 4.7 percent after Merrill Lynch joined other brokerages in downgrading the stock. [ID:nHKG179255] Last week, the company known as Chalco warned of an at least 50 percent drop in its first-half profit as it grapples with increased production costs and falling prices of its main product, alumina.

CNOOC (0883.HK), one of the most heavily traded stocks of the morning, bucked the broad trend and rallied 3 percent as international crude prices rose for the third straight session on supply disruptions in Nigeria.

The Hang Seng Index .HSI finished the morning session down 0.5 percent at 22,598.92 after opening flat.

Mainboard turnover fell to HK$30.15 billion ($3.9 billion) from Monday's HK$33.94 billion as investors awaited an interest rate decision from the U.S. Federal Reserve and an expected rate hike from People's Bank of China.

Hong Kong Exchanges & Clearing (0388.HK) slid 2.4 percent to HK$120.10 after Morgan Stanley said it expected shares in the bourse operator to fall sharply in the next 15 days.