Hong Kong stocks are set to ease on Friday morning as investors take profits after three days of strong gains, and shares of materials-related companies could decline due to falling commodity prices.

Shares on Wall Street edged lower on Thursday, hurt by a slide in drugmaker Merck (MRK.N) and shares of natural resource companies, but the S&P 500 .SPX held near 28-month highs on expectations for strong earnings.

Intel Corp's (INTC.O) better-than-expected earnings and strong revenue forecast confirmed those bets with its shares rising 2.7 percent in after-hours trading.

Chinese Internet shares such as Alibaba (1688.HK) and Tencent, (0700.HK) which have surged about 10 percent this week, will be in focus.

Shares of oil major CNOOC (0883.HK) will resume trading after it announced plans for the sale of 10-year and 30-year dollar-denominated that some traders believe is possibly intended for acquisitions.

Elsewhere in Asia, Japan's Nikkei .N225 was down 0.2percent while South Korea's KOSPI .KS11 was down 0.15 percent as 0115 GMT.

STOCKS TO WATCH:

* Prudential Financial Inc (PRU.N) said on Thursday that it would invest $500 million in a private equity fund to be managed by Chinese conglomerate Fosun (0656.HK), representing the biggest third-party investment by the U.S. insurer in its 135-year history. [ID:nTOE70C059]

* Skyworth Digital Holdings Ltd (0751.HK) said its China TV business unit achieved 13 percent year-on-year growth in flat panel TV sales volume in December, and it recorded a 5 percent revenue growth for overall TV sales in December.

* Aluminum Corporation of China Limited (2600.HK) said it would seek approval at a shareholder meeting on Feb 28 for its plan to issue up to 47 billion yuan worth of bonds in China, including 22 billion yuan of short- and medium-term notes.

* Air China (601111.SS) (0753.HK) said on Thursday that preliminary figures showed its net profit in 2010 was more than 200 percent that of 2009.

* Cathay Pacific Airways (0293.HK), Hong Kong's flag carrier, reported on Thursday a near 3 percent passenger growth in December and air freight volume also rose 12 percent on higher demand as the global economy recovers.

* Evergrande Real Estate Group Ltd (3333.HK) said on Friday it would issue 5.55 billion yuan worth of U.S. dollar settled senior notes due 2014 and 3.7 billion yuan worth of U.S. dollar settled senior notes due 2016, raising $1.38 billion in net proceeds to repay onshore bank borrowings, to replenish cash reserves, and to fund existing and new property projects.

* China Power New Energy Development Co Ltd (0735.HK) said it generated about 3.74 million MWh of power in 2010, an increase of 31.4 percent from a year ago, thanks to continuous improvement in existing projects and contribution from additional and newly acquired projects.

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