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HONG KONG, Sept 22 (Reuters) - Hong Kong stocks were flat early on Monday, picking up from an opening slide after Wall Street fell, as stocks such as Hong Kong's biggest carrier Cathay Pacific Airways Ltd drew bargain hunting.
Cathay, which has been hit by fears of another SARS outbreak that have now subsided, rose on hopes for a rebound in international tourism in the next few months, traditionally Hong Kong's peak season for trade shows.
The benchmark Hang Seng Index was up 0.03 percent, or 3.78 points, at 10,972.20 after 31 minutes' trade.
Cathay was trading 1.65 percent higher at HK$12.30.
Banks were also drawing buying on hopes that the local economy is recovering and their mortgage business will improve while bad debts will ease.
"Banks will continue to fare well on economic recovery hopes," said Alfred Chan, chief dealer at Cheer Pearl Investment Ltd. "But the index will continue to consolidate during the day after it failed to break the resistance level of 11,250 last week."
HSBC Holdings Plc fell prey to profit taking and shed 0.48 percent to HK$103 after hitting an intraday high of HK$104 on Friday, its highest in two-and-a-half years. HSBC is the index's largest stock by market capitalisation and the world's second-largest bank by value,
Other banking stocks advanced, including HSBC's local unit Hang Seng Bank Ltd , which was up 1.39 percent to HK$91.25.
News that flat sales remained strong at the weekend sparked hopes that banks would win more mortgage business.
China's biggest offshore oil producer, CNOOC Ltd , was another winner, gaining 2.05 percent to HK$12.40. It had lost four percent over the past month through Friday's close as investors worried that the group's earnings would be crimped by declining oil prices.
Traders said oil plays would come back into favour in the mid-term as winter approaches, boosting demand for energy.
Elsewhere, investors were watching China-backed container leasing company and ports investor Cosco Pacific Ltd and minivan maker Brilliance China Automotive Holdings Ltd ahead of their interim results.
Cosco Pacific shed 0.57 percent to HK$8.70 while Brilliance China fell 2.94 percent to HK$2.475.
Chan said the minivan maker would find support at HK$2.40 as demand for vehicles in China would remain strong in coming years.
Digital broadcasting equipment maker DVN (Holdings) Ltd skidded 5.62 percent to HK$0.84 on resuming trade after a share placement priced at a 7.9 percent discount to the stock's previous close.
The company said it would reap net proceeds of HK$59.8 million (US$7.67 million) from the placement. The funds will be used to expand its digital services busines in China.
Market turnover totalled HK$2.96 billion after 36 minutes' trade.
(US$1=HK$7.8)