HONG KONG, Dec 18 - Hong Kong shares edged up 0.2 percent on Thursday with 3.4 percent drop in HSBC Holdings countering some of the gains in Chinese industrial stocks on hopes for more economic stimulus measures from Beijing.

Badly-battered Macau casino stocks outperformed on year-end short covering and expectations that tight travel restrictions for mainland Chinese gamblers will be relaxed.

"We expect the Mainland Chinese visa restrictions to be lifted by mid-next year, which will drive a rebound in visitation into Macau once again. With this in mind, we still believe that the longer term fundamentals for Macau's gaming sector remain sound," said Gary Pinge, gaming analyst with Macquarie in Hong Kong.

 

Galaxy Entertainment ended up 40 percent, having slumped nearly 90 percent this year.

Tycoon Stanley Ho's SJM Holdings rallied 27.9 percent while Melco International Development added 25.3 percent.

China Communications Services fell 5 percent after CISCO cut its stake in the telecom services provider by nearly half, selling 90 million shares at HK$4.36 each.

 The benchmark Hang Seng Index .HSI ended 37.29 points higher at 15,497.81, still down 44 percent year-to-date.

Mainboard turnover fell to HK$52.2 billion from HK$56.4 billion on Wednesday.

HSBC fell to HK$81.6 as investors continued to fret about possible dividend cuts and capital raising at Europe's largest bank.

Offshore oil producer CNOOC tumbled 5.3 percent after crude oil price fell below $40 per barrel for the first time in four years despite a supply cut by producer cartel OPEC.

Dealers said OPEC's record supply cut, 2.2 million barrels of oil per day, was too little to offset slumping energy demand amid a global economic recession.

But property stocks provided support with Hong Kong's largest developer Sun Hung Kai Properties gaining 3.3 percent even after local lenders said on Wednesday they would hold rates amid margin worries.

"The markets still expects banks to cut rates despite the early resistance. They need to cut rates to stimulate borrowing and assure quality of credit," said Tai Fook's Mak.

Sino Land rose 9.3 percent while Wharf Holdings added 8.3 percent.

Athletic footwear maker Yue Yuen Industrial jumped 11.3 percent after it reported a 22 percent increase in its November sales. A 9 percent rise in second quarter net profit at its customer Nike also supported gains in Yue Yuen.

 

CHINA STIMULUS SUPPORT

Chinese industrial stocks jumped on talk that Beijing was set to announce additional measures to boost growth in nine sectors, including steel, auto, shipping and petrochemicals, before the end of year of the year or early next year.

Maanshan Iron & Steel  soared 8.9 percent after Morgan Stanley upgraded the stock to overweight from underweight on expectations of stronger revenues from the railway sector. China has announced it will increase railway spending to 600 billion yuan for 2009 from 320 billion yuan this year, said the brokerage.

The China Enterprises Index of top locally listed mainland Chinese firms .HSCE ended up 2.2 percent at 8,555.06 led by 2.8 percent gain in top lender ICBC.

The H-share index has risen 30 percent in the last month on continued talk about massive support measures.