HK shares seen lower on U.S. data, lower oil

HONG KONG, Oct 3 (Reuters) - Hong Kong shares are set to open weaker on Friday with disappointing U.S. unemployment data adding to existing fears about a likely recession in the world's largest economy.

The Dow .DJI shed 3.2 percent while the S&P 500 .SPX and Nasdaq .IXIC both dropped more than 4 percent as Wall Street worried the economy may slide into recession, further hitting corporate profits even if Congress passes a $700 billion rescue package this week.

Data showing the number of people filing for unemployment benefits hit a seven-year high painted a troubling picture, as did a report showing a steep drop in factory orders in August.

Metals and oil tumbled on Thursday on fears a slowdown in economic growth will hurt demand for commodities.

Hong Kong shares reversed course to end 1.1 percent higher on Thursday, helped by surge in Ping An Insurance (2318.HK) after newly-nationalised Fortis scrapped a $3 billion asset management deal with the Chinese insurer.

STOCKS TO WATCH

* Goldman Sachs downgraded TVB (0511.HK) to neutral, citing slower Hong Kong economic environment to negatively impact growth in TV advertising spending over the next year or two. It said margin pressure is likely to persist as TVB increases program productions and continues to digitalize its network.

* Deutsche Bank downgraded Cathay Pacific (0293.HK) to sell on worries over slowing demand trends. Cathay's traffic growth has slowed to 7 percent in August 2008 from 20 percent year-on-year in December 2007 .

* Deutsche Bank downgraded BYD Electronic (0285.HK) to hold following a strong surge in the stock after U.S. billionaire Warren Buffett's Berkshire Hathaway (BRKa.N) unit bought a 10 percent stake in the company last week.