HK shares down 1.8 pct; Tsingtao outperforms

HONG KONG, Aug 21 (Reuters) - Hong Kong shares fell 1.8 percent on Thursday, wiping out most of the previous session's sharp rally, as investors grew more sceptical about speculation that Beijing will announce a stimulus package for the economy and badly battered mainland Chinese markets.

"The stimulus plan is just a rumour at this point and investors are pessimistic enough to treat no news as bad news," said Peter Lai, director at DBS Vickers.

Offshore oil producer CNOOC (0883.HK) helped stem losses in the broad market after crude oil topped $116 a barrel on Thursday after Russia expresed its displeasure over a U.S.-Poland defence pact. The stock jumped 1.5 percent to HK$10.80.

Higher oil prices sent Asia's largest refiner Sinopec Corp (0386.HK) down 3.8 percent while PetroChina (0857.HK), Asia's largest oil and gas company, which also has refining interests, fell 2 percent. Stronger oil prices hurt profits for Chinese refiners because the government caps petroleum product prices.

Shares in Tsingtao Brewery Co Ltd (0168.HK), China's best knwon beer brand, jumped 5.4 percent, adding to Wednesday's 7.6 rally after the company posted a 41.9 percent increase in first half net profit despite soaring raw material prices.

The Hang Seng Index .HSI ended the morning session 372.53 points lower at 20,558.73.

The blue chip index rose 2.2 percent on Wednesday, tracking the 7.6 percent rally in Shanghai, on hopes of a market stimulus package and expansionary fiscal policies from Beijing.

Mainboard turnover fell to HK$29.5 billion ($3.8 billion) from HK$33.42 billion at mid-day on Thursday.

Index heavyweight China Mobile (0914.HK) led decliners on the main index with a 2.9 percent drop. Top insurer China Life (2628.HK) lost 1.8 percent.

Europe's largest bank HSBC Holdings (0005.HK) fell 1.6 percent on expectations of an imminent government bailout of beleagured U.S housing giants Fannie Mae and Freddie Mac to stabilise the shaky financial system.

Shares in billionaire Li Ka-shing's flagship Hutchison Whampoa (0013.HK) fell 1.5 percent ahead of its earnings announcement today. Sister company Cheung Kong Holdings (0001.HK), also due to announce its first half financial performance today, slid 2.8 percent.

The China Enterprises Index .HSCE of top locally-listed mainland firms dropped 1.6 percent.

Shares in China South Locomotive & Rolling Stock Corp Ltd (1766.HK), the country's largest train maker, rose 5.4 percent in their Hong Kong trading debut on Thursday, lagging expectations, after the firm raised a combined $1.5 billion in a Hong Kong and Shanghai listing.

The stock opened up 18 percent at HK$3.08 on Thursday, as compared with an IPO price of HK$2.60.

(Reporting by Parvathy Ullatil; editing by Kim Coghill)