Yesterday, the index drifted sideways, albeit with a downward bias, throughout the session before finishing 6.51 points or 0.05 per cent, lower at 13,597.1.

It did not fall more than 56 points below the previous close and ended 1.67 per cent lower on the week.

The H-share index dropped 10.91 points, or 0.23 per cent, to 4,800.4, as a near 4 per cent drop in crude oil prices on Wednesday weighed on PetroChina.

The oil producer, which is the single largest index constituent with a weighting of about 18 per cent, fell 1.55 per cent to $4.75.

CNOOC, which is a member of the Hang Seng Index, dropped 1.16 per cent to $4.275, while China Petroleum and Chemical rose 0.79 per cent to $3.175.

Futures prices on metals, including copper and aluminium, also fell sharply in response to a stronger US dollar with negative implications for related stocks.

Jiangxi Copper fell 1.78 per cent to $4.15 and Aluminum Corp slipped 1.64 per cent to $4.50.

'There was nothing really exciting going on. Some retail investors were buying HSBC, because they found the current levels attractive for long-term investments, but the buying wasn't very aggressive,' one retail broker said, noting that the turnover dropped right back to $15.81 billion from the previous day's $22.36 billion.

'Also, some people who were buying blue chips in the morning sold again in the afternoon because they didn't want to be exposed in case the US market falls on Monday,' he added.

The Hong Kong market will be closed today and on Monday, while the US market will shut only today.

HSBC finished the day unchanged at $124, but lost $2 on the week.

Property stocks were also generally weaker with the sector-index falling 0.47 per cent, amid expectations that Hong Kong banks would raise their prime lending rates further in the near term.

Yesterday, there were also reports that some banks had effectively raised mortgage rates by reducing the discount at which these loans are priced in relation to the prime rate, but this turned out not to be the case.

'Market players do worry about more interest rate hikes so property stocks are not among the favourites,' Kenny Tang Sing-hing, a research manager with Tung Tai Securities, said.

Cheung Kong dropped 0.72 per cent to $69.25.

Sun Hung Kai Properties also fell, by 0.35 per cent, to $71.50. Limiting the losses, China Mobile and Unicom both gained, finishing up 0.58 per cent and 0.81 per cent respectively. After the market closed, Unicom reported a 4 per cent rise in net profit last year, which was well below analysts' forecasts.

Lenovo jumped 4.08 per cent to $2.55 at opening after the Wall Street Journal reported that three US venture capital firms might invest a combined US$350 million to take a stake in the company which recently agreed to buy the personal computer unit of IBM.

The stock was suspended only six minutes into the session, however, pending a price sensitive announcement.

Mainland airline stocks were also firm on the back of the lower oil prices, with China Eastern Airlines leading the way with a 2.19 per cent gain to $1.40. But, Cathay Pacific fell 0.34 per cent to $14.55.

Among the small-caps, China Everbright dropped 11.1 per cent to $3 after the company said it expected to report a loss for last year after its mainland banking unit, China Everbright Bank, had made 'considerable losses' during the year. The 21.39 per cent-owned bank contributed 66.5 per cent of the group's pre-exceptional net profit in 2003.

Mr Tang expected more weakness after the holidays and ahead of the expiry of the March index futures contract on Wednesday, projecting the blue-chip index would test the 13,300-point level.

The March and April contracts both closed at a slight discount to the underlying index .