WEAKENING sentiment about the chance of an interest rate cut next week dragged stocks down for a third day. The Hang Seng Index closed 54.19 points down at 9,858.65, a loss of 0.54 per cent. At one stage it had been 97.13 points down. Turnover was moderate at $3.07 billion, down from the revised $3.25 billion for Thursday. Volume was improved, with 1.10 billion shares changing hands. James Osborn, sales director at ING Barings, said: 'Wall Street was down, the bond market was steady, and most of regional markets were down. It was just apathy really.' The US Federal Reserve open market committee is to meet on Tuesday to decide whether to cut interest rates and recent economic figures from the US have been sending mixed signals. Wall Street is seen as a good indicator of any change in interest rates and the slide in the Dow Jones Industrial Average on Thursday was taken as a signal a further rate cut is not likely soon. The Dow fell 34.32 points to 5,182.15. The approach of the holiday season also is depriving the index of impetus. Samuel Ho, research director at Seapower Securities, said: 'The market is still capped below the 10,000 level. People would like to stay on the sidelines ahead of the Christmas break.' The index began the day with a slide, dropping from the previous close of 9,912.84 to around 9,820 before finding support. It spiked back up but was soon under selling pressure again, falling to the day's low of 9,815.71 just before lunch. It reached the AM close at 9,823.60, an intra-day fall of 89.24 points. The afternoon saw the index retrace some of its losses in thin turnover. Individual stocks were mostly lower. Among the 33 blue chips, seven rose, six closed unchanged and 20 lost value. Property counters and banks led the way down as they have most to lose if interest rates remain unchanged. The Hang Seng property sub-index shed 140.30 points to 16,891.48. Among larger property stocks, Sun Hung Kai Properties lost 75 cents to $60.25, Henderson Land Development fell 50 cents to $46.10 and Cheung Kong fell 10 cents to $44.70. Smaller property investment counters were also sold heavily. Hysan Development lost 30 cents to $19.60 and Great Eagle fell 20 cents $20.75. The Hang Seng finance sub-index shed 46.48 points to 9,765.37. Bank of East Asia was notably hard hit, dropping 45 cents to $27.45 in heavy turnover of $162.52 million. HSBC lost 50 cents to $116 and Hang Seng Bank fell 25 cents to $68.75. Utilities did not escape the selling. The Hang Seng utilities sub-index fell 77.29 points to 9,886.98. Hongkong Telecom dragged the sector down most as it continues to be sold on fears it will lose revenue from the deregulation of the telephone market. Telecom fell 15 cents to $13.45. Among other utilities, China Light & Power fell 30 cents to $35.40 and Hongkong Electric lost five cents to $25.40. Commercial and industrial counters were mixed with the Hang Seng sub-index falling just 14.53 points to 7,379.11. Conglomerate Swire Pacific fell heavily following news its subsidiary Cathay Pacific had pulled out of a proposed joint venture to manage an airport in Xiamen. Swire fell 75 cents to $59.25. Cathay meanwhile bounced back, gaining 15 cents to $12 after losing 20 cents on Thursday. Hotel stocks were weaker as profit takers pegged back their recent rally. Hongkong & Shanghai Hotels lost 20 cents to $10.75 and Shangri-La Asia fell 10 cents to $9.35. Second and third line counters were mixed, with a few making strong gains. Clothes retailer Giordano International performed impressively amid signs the retail sector may be picking up. Giordano added 55 cents or 7.74 per cent to $7.65. Sports shoe maker Kingmaker Footwear strode ahead, adding 12 cents or 8.88 per cent to $1.47 on rumours a share placement was in the offing. Property developer and investor, Lucky Man Properties continued its rally, adding 70 cents or 10 per cent to $7.70. Lucky Man rose $1.45 on Thursday following news of a special cash dividend and bonus share issue. Looking ahead, brokers see the index set to trade in a narrow range unless there is some extraordinary news next week. Mr Osborn said: 'People are saying there might be an end of year rally but frankly why should there be?'