Hong Kong stocks could set new year highs in trading this week, say brokers, after last Friday's US economic data eased concerns that interest rates are about to rise. The benchmark Hang Seng Index is almost certain to challenge the high of 11,600 set in February and perhaps even surpass it, they say, as long as turnover remains strong. US retail sales and consumer price index figures came out last Friday and the mild results quelled fears the Federal Reserve was about to raise rates as much as 50 basis points. US stocks and bonds soared, as did Hong Kong stocks traded in London, and the rise is likely to continue this week. Tai Fook Securities director Lennon Chan Wing-Lung said: 'The sentiment is turning bullish once again. 'Investors do not see that interest rates are likely to rise in the US.' The rally in stocks was sparked when the US Government said prices for goods and services rose at half the expected rate in August. At the same time, US retail sales climbed 0.2 per cent, less than the expected 0.7 per cent. US stocks went into a frenzy on the news with the Dow Jones Industrials Average rising 67 points to set a new historic high of 5,839. US long bond prices also soared, meaning yields, which move in the opposite direction, slumped. Yields on 30-year Treasuries dropped 12 basis points on Friday to 6.95 per cent, the lowest since August 23. The Hang Seng London Reference Index also jumped on the data, climbing 150.94 to close at 11,519.98. The Federal Open Market Committee had been tipped by many to be considering raising interest rates by as much as 50 basis points when it meets on September 24. Now a 25 basis point rise is seen as the most the Fed will countenance. Hopes for stable interest rates should speed up the momentum which has been building up in local stocks and could see them overcome the heavy resistance which is expected to increase as the index nears the 11,600 level. Mr Chan said: 'Everyone will be looking for selling pressure at 11,500 so many buyers will want to wait and see. There will be tug-of-war between 11,450 and 11,550.' Brokers said one factor that could deprive the rally of its impetus remains the flow of funds into Hong Kong, which can be very fickle. Seapower Securities senior marketing manager Samuel Ho said: 'A lot depends on the fund flow.' Interest rate sensitive property and banking stocks are seen likely to continue driving the local market.