HONG KONG, Aug 31 (Reuters) - Hong Kong stocks are set to retreat on Tuesday, heading for a monthly loss, after a rally from early July petered out earlier this month on the back of an increasingly cloudy outlook for growth in developed economies.
U.S. stocks fell in the year's lightest volume on Monday as worries about the pace of economic recovery overshadowed data showing a rise in consumer spending and income.
"The main factors are still widespread worries about a double-dip recession and questions about the sustainability of strong earnings from China," said Tony Tong, head of market strategy at China Everbright Group.
In Hong Kong on Monday, the benchmark Hang Seng Index ended 0.7 percent higher but pared some of its earlier gains.
With earnings season largely over, analysts see downside pressure as the focus shifts back to the global economy.
A breach of key technical supports, such as the 61.8 percent retracement of the index's 10.2 percent upmove from July 6 to Aug. 9, could open the way for a retest of the July low near 19,800.
In the region, Japan's Nikkei gave up all of Monday's gains and was down 2.3 percent while South Korea's KOSPI slipped 0.9 percent.
STOCKS TO WATCH:
- Russia's United Company Rusal Ltd, the world's top aluminium producer, said on Tuesday that it returned to the black in the second quarter thanks to higher output and better prices for the lightweight metal.
- Foxconn International Holdings Ltd, the world's top contract cell phone maker, slipped deep into the red in the first half, hit by falling handset prices and higher depreciation costs as it moves production to inland China to escape high labour costs.
- SJM Holdings Ltd, Macau's largest casino operator controlled by gambling tycoon Stanley Ho, said it was cautiously optimistic about the second half of 2010, even as it posted a quadrupling in its second-quarter net profit on an increase in gamblers placing their bets in its casinos.
- Dongfeng Motor Group Co Ltd, China's No.3 automaker, said on Monday that it had raised its 2010 sales target as Chinese car makers posted strong first-half growth but expect numbers to moderate through to year-end.
- China Shenhua Energy Co Ltd, the world's most valuable coal producer, said it expected to raise the proportion of its sales from spot coal in the second half to take advantage of higher prices.
- Russia had invited Shenhua Energy to take part in a coal liquefaction project, estimated to cost $2 billion to $3 billion, the Russian Energy Ministry said on Monday.
- China National Building Material Co Ltd started work on a $250 million cement factory in Iraq, as the war-torn country looks set to start rebuilding, which could lead to a construction boom. (Reporting by Vikram S Subhedar; Editing by Chris Lewis)