STOCKS headed higher for a third day as heavy buying of Hongkong Telecom inspired an otherwise flat market. The Hang Seng Index closed 49.52 points up at 9,501.61, a gain of 0.52 per cent. Telecom alone accounted for 45.28 points of the rise. Turnover was moderate at $4.24 billion, up from the revised $3.22 billion for Tuesday. Volume was also improved with 1.6 billion shares changing hands. Tai Fook Securities research manager Elton Cheung said: 'Telecom led the market up. The performance of the other companies was quite flat.' Telecom rose 70 cents or 5.73 per cent to $12.90 on news that the debilitating power struggle at its parent Cable & Wireless was over. Chairman Lord Young and chief executive James Ross both tendered their resignations in London on Tuesday and both relinquished their positions at Hongkong Telecom. The sharpness in the stock's rise was helped by the fact it had been clearly oversold since losing its monopoly on local telephone services on July 1. Shares had slipped from a June high of $16.55 to as low as $11.90 on Tuesday on fears the deregulation of the telephone industry would hamper its future earnings. Yesterday's gain was also helped by rumours Cable & Wireless might be the target of a hostile takeover bid. Another rumour suggested Cable & Wireless was likely to reduce its holding of Hongkong Telecom prior to 1997. Telecom led all stocks in turnover with $423.79 million worth of shares traded. Other stocks were mixed. Of the 33 Hang Seng Index constituents, 14 rose, four closed unchanged and 15 lost value. Seapower Securities research director Samuel Ho said: 'Investors are looking for oversold and good quality companies. There is plenty of switching going on.' Market sentiment remains volatile with the increasing likelihood of further interest rate cuts next month being offset by a poor corporate earnings outlook. The index began the day with a rise, climbing from the previous close of 9,452.09 to reach 9,540 after a few minutes trading. It then ran out of steam, dropping to the day's low of 9,479.82 at 10.30am before recovering to reach lunch at 9,542.01, an intra-day rise of 89.92 points. It continued to rally in the afternoon, reaching the day's high of 9,570.34 at 2.45pm before again drifting lower. Utilities led the market up, buoyed by the rise in Telecom. The Hang Seng utilities sub-index climbed 230.66 points to 9,722.59. Other utilities were mostly lower. Hongkong Electric lost 30 cents to $26.05, Hongkong and China Gas fell five cents to $12.45 and China Light & Power closed unchanged at $35.60. Properties were stronger with the Hang Seng sub-index adding 109.13 points to 16,540.24. Henderson Land Development led all property stocks, adding 90 cents to $45.90, Great Eagle rose 30 cents to $19.85 and New World Development added 20 cents to $30.80. Hopewell had a strong day as bargain-hunters boosted the stock by 17.5 cents or 4.4 per cent to $4.15. Brokers did not see this reflecting any substantial change in the company's fortunes. Vickers Ballas Securities research director Andrew Fernow said: 'Hopewell tested a very important technical support level at $4 and it had made a recovery. 'But the situation is that the company is still in a state of deterioration.' Banking stocks were mixed. The Hang Seng finance sub-index edged up 2.77 points to 9,383.73. HSBC fell 50 cents to $112, Bank of East Asia was unchanged at $27.10 and Hang Seng Bank rose 75 cents to $65. Second and third line stocks were generally subdued though a few did attract attention. The Hang Seng MidCap 50 Index rose 13.32 points to 1,192.32. H shares were stronger with the Hang Seng China Enterprises Index climbing 30.47 points or 4.38 per cent to 726.92. Mr Fernow said: 'Again this is a contrarian play. To certain people they looked very oversold.' Shanghai Haixing Shipping added five cents to 55 cents and Tianjin Bohai Chemical Industry rose four cents to 60 cents. Brokers see the major index continuing to trade in a range ahead of the weekend with more gains possible next week. Mr Cheung said: 'We should see the market have more consolidation before its goes above 9,600. There will be heavy profit-taking around that level.'