Hong Kong Stocks Fall on U.S. Economic Concern; Li & Fung Drops

Hong Kong stocks fell after reports on U.S. employment and the country's services industry stoked concern that the world's biggest economy is headed for recession.

Li & Fung Ltd., a supplier to Wal-Mart Stores Inc., posted its biggest slide since May 2004. China-related stocks such as Industrial & Commercial Bank of China Ltd. fell after the country's central bank said it will take more steps this year to cool inflation.

The Hang Seng Index dropped 733.88, or 2.7 percent, to 26,785.81 at 10:33 a.m. local time. The Hang Seng China Enterprises Index, which tracks 43 ``H shares'' of Chinese companies lost 2.7 percent to 15,481.62.

Li & Fung, which made more than 70 percent of its 2006 sales the U.S., slumped HK$2.10, or 6.8 percent, to HK$28.90. Foxconn International Holdings Ltd., the world's largest contract maker of mobile phones, dropped 86 cents, or 5.2 percent, to HK$15.70.

U.S. payrolls rose by 18,000, capping the worst year for job creation since 2003, according to Labor Department figures released Jan. 4. The jobless rate increased to 5 percent from 4.7 percent in November, while the Institute for Supply Management said growth in U.S. service industries cooled last month.

HSBC Holdings Plc, the Hang Seng Index's biggest constituent, dropped HK$2.30, or 1.7 percent, to HK$127.90. The company derives about a third of its sales from North America.

Among China-related stocks, Industrial and Commercial Bank, the world's biggest lender by market value, fell 16 cents, or 3 percent, to HK$5.15. China Construction Bank Corp., the nation's second-biggest, lost 19 cents, or 3.1 percent, to HK$6.02.

All but two stocks on the 43-member Hang Seng Index declined. January futures dropped 3.3 percent to 26,758.