7:00AM New York, 7:00PM Hong Kong – Hong Kong stocks fell sharply after February inflation accelerated and property stocks fell.

Hang Seng in Hong Kong fell 3.5% on persistent worries related to the U.S. economic health and rising inflation. Property stocks declined 5%.

Hong Kong government reported a steep rise in consumer price index to 6.3% in February from a year ago. Underlying inflation in the month rose at a rate of 5.1% from 4.3% in January. Rising food and energy cost lifted the index and severe weather conditions contributed as well.

While durable goods prices declined in the month by 3.7% almost all other items in the index rose. Utilities including electricity, gas and water rose 7.4%, clothing and footwear increased 0.6%, alcohol and tobacco added 0.9% and home prices increased 9.2%. Transport services increased 1.2%.

For the 12 months ending in February 2008, CPI index increased 2.6% from the previous annual period. Annual inflation in 2008 expected to rise to 3.4% from 2% in 2007. Apartment prices are expected to remain elevated and ma rise above 20% this year.

China Mobile dropped 3.2% after the release of earnings. The push to add new subscribers in the previous quarter came at higher cost of customer acquisition and lower monthly average revenue per subscriber.

Sino Land declined 5.2% and Cheung Kong closed 4.5% lower.

PetroChina (PTR: chart) dropped 7% after it reported a weak rise in earnings and weaker refining margins in the current quarter. Energy stocks fell as well after oil dropped 2% in the local trading. CNOOC plunged 10% and Sinopec fell 6.2%.

Metals and mining stocks fell sharply in the region dragging down Australia market with it. ASX index dropped 3.1% after BHP Billiton declined 8.3% and Rio Tinto fell 8%. Chalco in China trading fell 7% and Jiangxi Copper declined 8%.

Markets Review

In Hong Kong Hang Seng index decreased 758.72 or 3.47% closed to 21,108.22. Australia ASX 200 index decreased 161.60 or 3.06% to close 5,127.50. Markets in Japan, India, Indonesia, Pakistan, Malaysia, and Philippines were closed today.

In South Korea Kospi Index increased 1.16 or 0.07% to close at 1,623.39, in Thailand SET index closed lower 9.56 or 1.18% to 798.11.