Hong Kong shares close first trade of 2008 lower on US economic concerns

Hong Kong shares closed the first trading day of the year lower as most investors kept to the sidelines following a weak year-end finish on Wall Street and as they awaited the release of a slew of US economic data for clues on where the US economy is headed.

The US is expected to release jobs figures on Friday. The market expects December payrolls to show a further slowdown in employment growth.

The Hang Seng index closed down 252.13 points or 0.9 percent at 27,560.52, as investors booked gains from Monday's unexpected 400-point rally.

Turnover stayed low at 75.87 billion Hong Kong dollars.

"Monday's losses on Wall Street weighed on sentiment in the local market, causing the blue chips to give up (previous) gains," said Peter Lai, director of DBS Vickers.

"The market seems to lack direction and is very sentiment-oriented at this point. Investors are looking for news on the subprime problem, economic data from the US and macro economic measures from China ," he said.

Blue chips fell, with China Mobile down 1.70 Hong Kong dollars or 1.2 pct at 136.20, while HSBC Holding fell 80 cents to 130.90 dollars.

China Eastern Airlines closed up 34 cents or 4.4 percent at 8.05 dollars, helping limit the market's overall loss, as the possibility of a bidding war between the Singapore Airlines-Temasek Holdings alliance and China National Aviation Corp (CNAC) gathered strength.

Hopes picked up after CNAC, parent company of Air China, openly criticized the 3.80 Hong Kong dollar per share bid from SIA-Temasek, saying it does not reflect the fair value of CEA.

(1 US dollar = 7.80 Hong Kong dollars)