HONG KONG stocks rose to their highest levels in almost two years fuelled by heavy buying of utilities and other laggard stocks. Hongkong Telecom boosted the market the most amid a host of favourable rumours about spin-offs and its bid for a mobile telephone licence. Many conglomerate stocks saw solid gains as the sector has also been trailing the market. Turnover was again impressive as foreign money continues to flood into Hong Kong. Brokers say it shows no sign of letting up soon. The Hang Seng Index closed 106.60 points higher at 11,469.40, a gain of 0.93 per cent. Turnover was heavy at $9.57 billion, up from the revised $7.44 billion for Thursday. Volume was strong with 3.53 billion shares changing hands. John Schofield, research analyst at Schroder Securities Asia, said: 'There is cash coming into the market from all over the place. 'The whole month we have seen the volume between seven and 10 billion maintained consistently.' Utilities led up the market for a second day after lagging behind other sectors for most of the recent rally. Hongkong Telecom gained 75 cents to $15.65 in the day's highest turnover of $832.26 million. Brokers said buying of Telecom was fuelled by speculation it was planning to spin off part of its China business. Others said it was close to being awarded one of the new mobile telephone licences being awarded by the government. The stock was also boosted by the fact it and the other utilities have fallen so far behind the market they have become starkly undervalued. Overall market sentiment remained strong following the latest round of interest rate cuts, although the two most interest rate sensitive sectors, banks and properties, saw some consolidation. Edwin Cheung, dealing director at Taiwan Securities, said: 'Right now the market is playing switching. One day it is properties, a few days later it is the utilities.' The index began the day weaker, falling from the previous close of 11,362.80 to the day's low of 11,308.73 about 10.45 am. A boost in volume saw it climb strongly through the rest of the morning to reach lunch at 11,462.89, an intra-day rise of 100.09 points. The afternoon opened with a further rally and the index reached the day's high of 11,495.73 at 2.45 pm. It tailed of slightly to the close but turnover remained strong. Among the 33 blue chips, 18 rose, seven closed unchanged and eight lost value. The Hang Seng utilities sub-index soared 348.90, a rise of 3.26 per cent. China Light & Power followed Telecom up, adding 80 cents to $38, and Hongkong Electric rose 35 cents to $26.55. Conglomerates also gained. The Hang Seng commercial and industrial index, which includes conglomerates, added 120.34 points to 8,619.46. Many of the conglomerates have been lagging the market over the last month. Swire Pacific posted the biggest net gain in the market, climbing $2 to $70.75, Wharf rose 90 cents to $31.50 and Citic Pacific rose 50 cents to $31.40. Banks and properties were mixed as many investors locked in gains from the two sectors which have led this year's rally. A number of second and third liners were highly active as investors chased up laggards there as well. Real estate broker Midland Realty was one of the best percentage gainers, rising 45 cents or 16.07 per cent to $3.25. Samuel Lau, research director at China Everbright Securities, said: 'Property stocks have rallied strongly over the last few weeks and Midland offers good rewards from the improving property market.' Yesterday's new listing, H-share Jingwei Textile Machinery, made a strong debut. The counter closed 7.8 per cent over its issue price at $1.39 with 33.67 million shares traded. Mr Lau said: 'We are one of the co-underwriters of the stocks and we are obviously very happy. 'The textile industry is not a sunset industry in China and the stock trades at a very reasonable price earnings ratio compared to the other recent new listings.' Other brokers were less convinced, saying Jingwei had been cornered by a few large investors and its price may have been manipulated. Many of the other H shares also gained with the Hang Seng China Enterprises Index adding 4.27 points to 869.96.