Hong Kong shares close sharply lower on Europe bank worries, Shanghai slump

Share prices closed lower as European banking sector troubles overshadowed the US Congress' approval of a rescue plan for the nation's ailing financial institutions.

Steep falls across the region, including Shanghai which tumbled over 5 pct after a week-long holiday, and an early slide on European bourses sent investors scurrying to the sidelines as fears grew that the credit crisis has yet to run its course.

China banks fell on worries that Beijing may cut lending rates further to pump-prime the economy, squeezing banks' profit margins.

Resources stocks tumbled amid ongoing fears that demand for energy and raw materials will drop due to a deteriorating global macro-environment.

Macau gaming operators slumped as Beijing imposed further travel restrictions to the gambling haven, threatening casino revenues.

The Hang Seng index closed down 878.64 points or 4.97 pct at 16,803.76, off a low of 16,790.86 and high of 17,241.78.

Turnover was 47.33 bln hkd.

In the China banking sector, ICBC fell 0.23 hkd or 5.28 pct to 4.13, China Construction Bank was down 0.35 hkd or 7.29 pct at 4.45 and Bank of China was down 0.13 hkd or 4.48 pct at 2.77.

Among metals and resources counters, Zijin Mining slumped 0.51 hkd or 13.32 pct to 3.32, Chalco slipped 0.25 hkd or 5.56 pct at 4.25 and Angang Steel down 0.67 hkd or 9.31 pct at 6.53.

In the gaming sector, Galaxy Entertainment lost 0.16 hkd or 10.46 pct at 1.37, Melco International was 0.18 hkd or 9.33 pct lower at 1.75 and SJM Holdings was down 0.05 hkd or 3.07 pct at 1.58.

The Hang Seng China Enterprises index lost 596.37 points or 6.62 pct at 8,416.90.

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