Share prices were weaker at mid-morning as local property developers slumped on news of poor apartment sales over the Christmas weekend. The market came off its early lows as oil firm CNOOC and gold miners were supported by a rise in commodity prices amid heightened tensions in the Middle East as Israel retaliated against Hamas rocket fire. CITIC Pacific surged after news that a rescue plan from the parent company has been implemented and completed. CITIC Pacific issued convertible bonds worth 11.625 bln hkd to CITIC Group, under a bailout plan following massive forex losses at the unit. The bonds were automatically converted into CITIC Pacific shares at 8.0 hkd each, effectively raising CITIC Group's stake in the unit to 57.6 pct from 29.4 pct. Gains in select other blue chips, including China Mobile, also helped limit the downside. Volumes were light ahead of New Year holidays. The market will have a half-day session on Wednesday and will be closed on Thursday. ZTE Corp slumped nearly 5 pct as a significant number of its A-shares on the mainland came out of lock-up. At 11:05 am, the Hang Seng index was down 76.94 points or 0.54 pct at 14,107.20, off a low of 13,924.32 and high of 14,166.77. Turnover was 7.04 bln hkd. "Poor apartment sales by several major developers during the Christmas holidays were the major culprit for our market's drop today," said Linus Yip, strategist at First Shanghai Securities. He also noted that share prices of Cheung Kong, Henderson Land and Sun Hung Kai are at relatively high levels, offering room for correction. "There is room for correction in their share prices and this will add pressure on the property sector," he said. He said weakness in the Shanghai market is also weighing on the local market. Yip said sharp gains by oil and gold producers, following a rise in crude oil and gold prices, cushioned the market's fall Yip said many investors were not in a mood to trade ahead of the New Year holidays. Other dealers said H-shares were weighed by worries that the Shanghai market will remain under pressure near term as more A-shares will come out of lock-up on the mainland. Local property firms were sharply lower, with Cheung Kong losing 1.55 hkd or 2.05 pct at 71.45, Henderson Land down 1.10 hkd or 3.69 pct at 28.70, Sun Hung Kai shedding 1.40 hkd or 2.11 pct at 64.80 and Hang Lung Properties falling 0.32 hkd or 1.88 pct to 16.70. The property index was down 332.6 points or 1.94 pct at 16,800.94. Among blue chips, HSBC was down 0.75 hkd or 1.01 pct at 73.20, China Mobile was up 0.50 hkd or 0.74 pct at 75.05, Hong Kong Exchanges and Clearing up 0.20 hkd or 0.28 pct at 72.90 and Hutchison Whampoa up 0.40 hkd or 1.0 pct at 40.40. Among China financials, ICBC slipped 0.05 hkd or 1.21 pct to 4.09, China Construction Bank fell 0.06 hkd or 1.39 pct to 4.25, Bank of China was down 0.02 hkd or 0.91 pct at 2.18 and China Merchants Bank down 0.22 hkd or 1.58 pct at 13.68. CITIC Pacific was up 0.54 hkd or 7 pct at 8.24 after its parent raised its holding in the unit to 57.6 pct from 29.4 pct. Oil producers were higher as light, sweet crude rose 2.36 usd to 37.71 a barrel in New York on Friday after nine straight days of losses. CNOOC rose 0.21 hkd or 3.16 pct to 6.85 and PetroChina was up 0.02 hkd or 0.31 pct at 6.38. Refiner China Petroleum and Chemical Corp (Sinopec) was down 0.08 hkd or 1.72 pct at 4.56. Gold producers were sharply higher as the price of the precious metal rose. Sino Gold was up 1.25 hkd or 5.67 pct at 23.30, Zijin Mining rose 0.19 hkd or 4.53 pct to 4.38, Zhaojin Mining surged 0.35 hkd or 6.67 pct to 5.60 and Lingbao Gold gained 0.08 hkd or 4.17 pct at 2.0. Among other resources stocks, Chalco slipped 0.08 hkd or 1.92 pct at 4.09 and Jiangxi Copper was down 0.04 hkd or 0.72 pct at 5.61. China property firms were weaker on worries that property prices on the mainland will continue to drop due to a slowing economy. China Overseas Land dropped 0.16 hkd or 1.52 pct to 10.38, Guangzhou R&F Properties down 0.06 hkd or 0.73 pct at 8.15, Agile Property shed 0.04 hkd or 1.0 pct at 3.96. ZTE Corp fell 1.05 hkd or 4.9 pct to 20.40 as 368.21 mln A-shares, equivalent to 27.41 pct of capital, come out of lock-up today. Mengniu Dairy lost 0.12 hkd or 1.19 pct or 9.98 on profit-taking after surging 4.3 pct last Wednesday on hopes it may rope in a strategic investor. Mengniu warned last week that it may post a loss of 900 mln yuan this year as sales were affected by the milk-products contamination scandal in China. China steelmakers traded mixed despite a report that the mainland's major steel mills lost a combined 12.77 bln yuan in November, more than double a loss of 5.835 bln yuan in October. Maanshan Iron & Steel gained 0.05 hkd or 1.86 pct at 2.74, while Angang Steel slipped 0.04 hkd or 0.49 pct to 8.06. The Hang Seng China Enterprises index was down 43.13 points or 0.58 pct at 7,640.71.

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