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By Susan Fenton
HONG KONG, Aug 28 (Reuters) - Hong Kong stocks fell on Wednesday as a slide in U.S. consumer confidence reignited fears that Hong Kong's second biggest export market could head back into recession.
Property stocks, meanwhile, remained under pressure on concern that price discounts and more supply coming onto the market will hurt earnings.
The benchmark Hang Seng Index ended down 0.54 percent, or 55.27 points, at 10,130.25. It had found support at 10,070.28 as investors were unwilling to break 10,000 ahead of expiry of the August futures contract on Thursday, traders said.
The Hang Seng properties sub-index fell 1.16 percent to 12,226.69. "People are still very cautious," said Alex Wong, research manager at OSK Asia Securities. "I think there is also some MSCI-related selling as fund managers will have to switch to Bank of China."
Bank of China Hong Kong's entry to the MSCI Hong Kong Index after the market close on Friday means that the weighting of other stocks in the index will be slightly smaller.
Bank of China itself, however, tumbled 1.16 percent to HK$8.55 as investors found little encouragement in its first-half results.
Net profit fell by 18.5 percent to HK$3.42 billion (US$438.46 million) while its bad loan ratio, at 8.97 percent, remains higher than other local banks, although it narrowed sharply from 10.99 percent at the end of 2001.
The stock is expected, however, to find support ahead of its MSCI entry, analysts said. Market turnover at HK$5 billion was higher than in the past few days but still below the 20-day moving average of HK$5.3 billion.
Blue chips mostly declined as a slide in U.S. consumer confidence to a nine-month low depressed sentiment from the outset. But as U.S. consumer goods orders surged in July, the outlook for the world's biggest economy, and the direction of global equities, remains unclear, analysts said.
"Data is mixed right now, it's difficult to determine if the (U.S. and Hong Kong) economies will recover," said Lawrence Wu, a fund manager at OSK Asia Asset Management.
"I'd try to look at banking stocks. The banks have made big provisions against personal loans and credit cards but their corporate loans are still okay."
Some stocks drew bargain hunting in late trade, including China Unicom , China's second biggest mobile phone operator, which ended up 0.89 percent at HK$5.65 after sliding to HK$5.50 earlier.
Other movers included Chinese truck maker Qingling Motors , which dived 18.02 percent to HK$0.910 - wiping out the past month's gains - after it posted a 65 percent fall in first-half net profit.
Fierce competition in China's truck manufacturing industry took its toll on the company, which reported net profit of 59.42 million yuan (US$7.18 million) after cutting prices to spur sales.
(US$=HK$7.8=8.28 yuan)