HK shares seen rebounding on U.S. data, lower oil

HONG KONG, Aug 29 (Reuters) - Hong Kong shares are seen rebounding on Thursday after the previous session's sharp decline, encouraged by data showing stronger-than-expected U.S. economic and a decline in oil prices.

U.S. stocks rose sharply on Thursday as the government reported the economy grew at a surprisingly robust clip in the second quarter and oil prices eased, driving gains in major industrial and financial companies.

The dollar's surge and a pledge by the U.S. government and the International Energy Agency to contain any threat to oil supplies from Tropical Storm Gustav led to a drop in prices of crude and other commodities on Thursday.

"Hong Kong shares should rebound in-line with overnight gains in U.S. markets. After the steep correction on Thursday, the Hang Seng Index should bounce back to 21,300-21,400 points today," said Conita Hung, head of equity markets with Delta Asia Financial Group.

Hong Kong shares fell 2.3 percent to 20,972.29 on Thursday, as major Chinese telcos hit year lows and Esprit Holdings (0330.HK) tumbled to its lowest close in two years amid gloomy analyst forecasts, while oil refiners slid on higher crude prices.

STOCKS TO WATCH-

* Bank of China (3988.HK), the country's flagship foreign exchange lender, on Thursday posted a forecast-beating 15 percent rise in second-quarter profit as rising fee income helped offset its exposure to overseas holdings including subprime U.S. mortgage assets [ID:nHKG51745].

But BOC's first-half profit growth was the weakest among its peers due to its heavy overseas presence as U.S. rate cuts compressed its foreign currency lending spreads.

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* Morgan Stanley downgraded Bank of China Hong Kong (2388.HK) to underweight from equal-weight on Friday, citing huge uncertainties in its investment book, weak core earnings and low capital efficiency [ID:nnHKG73673].

Morgan Stanley said it cut its target price on the Chinese bank to HK$15.50 from HK$17 after the bank posted a 5 percent year-on-year drop in earnings due mainly to large losses on its investment book, especially on U.S. prime and subprime mortgages.

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* China Telecom (0728.HK), the nation's largest fixed-line service provider, has made a formal request to the Ministry of Industry and Information Technology for network-sharing arrangements with other telecommunications operators to boost usage and cut capital spending, said the South China Morning Post, citing chairman Wang Xiaochu. --------------MARKET SNAPSHOT @ 23:16 GMT ------------- INSTRUMENT LAST PCT CHG NET CHG S&P 500 .SPX 1,300.68 1.48% 1 9.020 USD/JPY <JPY=> 109.50 0.07% 0.080 10-YR US TSY YLD <US10YT=RR> 3.789 -- 0.000 SPOT GOLD <XAU=> $831.80 -0.17% -1.450 US CRUDE CLc1 $116.37 0.67% 0.780 DOW JONES .DJI 11715.18 1.85% 212.67 ASIA ADRS .BKAS 137.95 0.31% 0.43 -------------------------------------------------------------- > SEA Stocks-Mostly higher, Singapore drops to 21-mth low [.SO] > US STOCKS-Strong U.S. data, weak oil sparks Wall St rally [.N] > Oil falls as Us. IEA ready emergency stockpiles [O/R] > FOREX-U.S. dollar edges up, cheered by growth data [USD/] > TREASURIES-Bonds see minor setback from jump in Q2 GDP [US/] > Gold ends up but off highs as dollar turns higher [GOL/]

(Reporting by Parvathy Ullatil; Editing by)