HK shares turn lower led by CNOOC, China Shenhua

HONG KONG, July 18 (Reuters) - Hong Kong shares turned lower in late morning trade on Friday, as investors focused on expected losses on Wall Street tonight and after lower crude prices sent oil producer CNOOC (0883.HK: Quote, Profile, Research) and coal stocks tumbling.

U.S. markets are expected to take a beating after Google (GOOG.O: Quote, Profile, Research), Microsoft MSFT.N and Merrill Lynch (MER.N: Quote, Profile, Research), which announced their results after the U.S. stock market closed on Thursday, missed Wall Street estimates. Investors are also anxious ahead of Citigroup's (C.N: Quote, Profile, Research) earnings tonight.

Offshore oil producer CNOOC (0883.HK: Quote, Profile, Research) slid 4.1 percent as oil prices held around $130 per barrel on Friday, down more than 10 percent from last week's record.

Asia's biggest oil and gas producer, PetroChina (0857.HK: Quote, Profile, Research), fell 0.9 percent.

Coal stocks weighed as industry leader China Shenhua Energy (1088.HK: Quote, Profile, Research) fell 4.5 percent and smaller rival Yanzhou Coal (1171.HK: Quote, Profile, Research) tumbled 9.1 percent. Investors are less optimistic about earnings growth in coal companies after a series of profit warnings from Chinese companies.

The Hang Seng Index .HSI erased early gains to end the morning session 0.1 percent lower at 21,709.52, after opening 1.3 percent higher.

"Investors are nervous about the U.S market performance tonight after disappointing results from three major companies. This is pushing most investors to the sidelines and keeping volumes thin," said Castor Pang, strategist with Sun Hung Kai Financial.

Europe's largest bank, HSBC Holdings (0005.HK: Quote, Profile, Research), climbed 0.8 percent, leading gainers on the main index after U.S. peer JP Morgan (JPM.N: Quote, Profile, Research) surprised investors with a smaller-than-expected profit decline for the first half. [ID:nN17472235]

Local property stock rallied, with Sun Hung Kai Properties (0016.HK: Quote, Profile, Research) climbing 2.4 percent and Hang Lung Properties (0101.HK: Quote, Profile, Research) advancing 2.7 percent after analysts said the sell-down in realty counters this year had exceeded the slowdown in the property market.