(Updates with early level, stock moves, comments)
HONG KONG, Dec 20 (Reuters) - Hong Kong stocks were lower in early Friday trade, after the United States said Iraq was in "material breach" of a United Nations disarmament resolution, intensifying fears that a war between the two is inevitable.
Investors were also unwilling to hold on to positions ahead of the Christmas holidays, selling down telecom stocks such as China Unicom Ltd , as uncertain earnings growth worsened sentiment on the sector.
The benchmark Hang Seng Index slipped 0.74 percent to 9,486.56 points by 10:35 (0235 GMT). Trade was light with only HK$890 million (US$114 million) worth of shares changing hands about 36 minutes after the market opened.
"It's mainly war fears that have kept the market from rebounding," said Herbert Lau, head of research at Celestial Asia Securities. "Money's just flowing into the traditional safe havens like commodities."
China Unicom, the mainland's second largest cellular operator, was knocked 2.73 percent lower to HK$5.35.
Its larger rival, China Mobile , was off 1.05 percent to HK$18.90. The firm said earlier on Friday that its subscriber base rose by 1.77 percent in November from October, trailing a national gain of 2.29 percent.
China Mobile said it had 115.61 million users at the end of November, compared with 113.6 million at the end of October.
Among other blue chips, Hong Kong's flagship airline Cathay Pacific Airways extended losses over the last few days after oil prices spiked to a near two-year high as the White House reacted to what it called a deceptive weapons declaration from Iraq.
Iraq is the holder of the second largest oil reserves in the world.
Cathay stock was off 0.92 percent to HK$10.80.
China's largest offshore oil producer, CNOOC Ltd , also succumbed to profit-taking after a 7.1 percent rise this year. The stock was the biggest blue chip loser in early trade, falling 2.38 percent to HK$10.25.
Losers were outpacing gainers 185 to 63, with 572 stocks unchanged.
(US$1=HK$7.8)