By Liz Lee

BEIJING, July 17 (Reuters) - Severe tropical storm Talim is forecast to make landfall as a typhoon in the south of China on Monday night, the country's weather forecaster said, with local authorities cancelling flights, recalling ships and warning residents to stay home.

China Meteorological Administration issued an orange alert for Talim on Monday, saying the storm was expected to increase in intensity into a severe typhoon by the time it made landfall along the southern coast from Guangdong to Hainan.

China has a four-tier colour-coded weather warning system under which orange is the second highest alert. Talim is set to be the fourth typhoon this year but the first to make landfall in China, according to weather predictions.

Early on Monday, the meteorological centre said Talim was located 375km (230 miles) south-east of Zhanjiang City in Guangdong province, moving at a speed of 20km per hour (12 miles per hour).

Hong Kong markets halted morning trade as its observatory put in place storm signal No. 8 for Talim. The stock market of the special administrative region will be shut rest of day if the typhoon signal remained at 8.

Hong Kong Disneyland also delayed its opening, saying it will reopen within three hours but on limited capacity when the storm signal is removed.

The meteorological centre forecast gale force winds in the seas near the southern provinces and regions and exceptionally heavy rains of 250-280mm (9.8-11 inches) in the southwestern coast of Guangxi and northern Hainan Island.

Hainan's Marine Forecasting Station also warned of waves of up of six metres (20 feet) south of the tourist island, Xinhua reported.

Authorities in Hainan asked ships in nearby waters to return to port and ferry services between Hainan and Guangdong were suspended early on Sunday.

Zhuhai Jinwan Airport in Guangdong cancelled 43 inbound and 36 outbound flights on Monday, while Meilan International Airport in Hainan's capital city Haikou and Qionghai Boao Airport cancelled all flights, state media reported.

Haikou city will also suspend classes, work, flights, park and business activities from noon Monday, requiring residents to stay home and opening emergency shelters to the public, state television CCTV reported. (Reporting by Liz Lee; Additional reporting by Beijing newsroom; Editing by Lincoln Feast)