Hong Kong stocks drifted lower in soporific trading yesterday as uncertainty ahead of last night's US employment data kept investors on the sidelines. Many feared the US August non-farm payroll figures would signal that the Federal Reserve will move to raise interest rates this month. The market retraced much of its losses near the close, however, as a short squeeze in the futures sent stocks sharply higher. The Hang Seng Index closed 14.92 points lower at 11,025.59. At one stage it was 110.14 points down. Turnover fell to $3.34 billion from Thursday's revised $3.52 billion. Hamon Investment Group senior fund manager Lawrence Lee said: 'Everyone was just waiting for the figures. 'The market sentiment is for an interest rate rise, so most investors are cautious.' The Federal Open Market Committee meets next on September 24 and there is growing conviction rates will increase 25 or even 50 basis points. Higher interest rates are bad for stocks as they pare corporate earnings and make bonds better investments. The non-farm payrolls, a leading indicator of US economic growth, showed 250,000 new jobs were created in August, ahead of analysts expectations. Stocks recovered from their early lows in the afternoon helped by buying from overseas investors. The market turned sharply higher in the last few minutes as futures traders boosted the cash market to force those holding short positions to buy back shares at higher prices. Individual stocks closed mixed. Among the 33 Hang Seng Index constituents, 11 advanced, three closed unchanged, and 19 lost value. Swire Pacific suffered the biggest net loss in the market, falling $1 to $66.75. Banking stocks also suffered, being sensitive to higher interest rates. HSBC fell 50 cents to $131.50, and Hang Seng Bank lost 25 cents to $78. Property related conglomerate Wharf bucked the trend, gaining 30 cents to $29.20 in turnover of $82.30 million Brokers said the stock has been buoyed by investors who were positive on the company's interim results announced on Wednesday. Outside the index, Indonesian oil producer Seaunion rose in heavy trading as investors bet rising energy prices will bolster earnings. Seaunion rose 5.59 per cent to 17 cents with 281.49 million shares changing hands. Tai Fook Securities research head Tony Yung said: 'We see the market should continue to drift downwards next week. At this level, stocks are still not cheap.'