Hong Kong stocks closed only slightly lower yesterday despite a rise of 25 basis points in US and Hong Kong interest rates. Brokers said investors were more than ready for the increase. Some said the modest rise could be a benefit to the market in the longer term. The Hang Seng Index fell 56.14 points to 12.832.53, a loss of 0.43 per cent. Volume slumped to $7.26 billion from $10.32 billion on Tuesday. Yesterday's losses were led by Sino Land, which fell 3.55 per cent after a major property purchase. Hongkong Telecom dropped a further 2.9 per cent after the Chinese Government said it was not interested in buying a stake in the utility. Brokers said that many market players were already sidelined ahead of the Easter holiday. Sentiment was also dampened by government plans to cool property speculation by releasing more land and allowing earlier pre-sale of flats, broker said. Sun Hung Kai Properties, Great Eagle and Henderson Land all ended lower. Cheung Kong, however, rose 0.71 per cent to $70.50 ahead of reporting a 23 per cent rise in net profit for last year. Some saw the increase in US and Hong Kong interest rates as a positive factor. Salomon Brothers analyst Michael Green said the rise in interest rates could cool property speculation, reducing the need for further government intervention. The brightest spot among blue chips was Henderson Investment, which jumped 5.81 per cent to $8.20, its first major gain since mid-January. Brokers and analysts complained that the market has lost direction. DBS Securities research director Percy Au-young said: 'There is nothing exciting to pull the market for the time being.' China Everbright Securities research head Patrick Chia said he favoured utility stocks, pointing out that they had under-performed the market recently and were a traditional haven for investors during periods of uncertainty. A shift into utilities could benefit Hongkong Telecom, analysts said. Tai Fook Securities managing director Lennon Chan believes Hongkong Telecom should find support at current levels. 'This is the level it was at before the rumours started,' he said. Taiwan Securities dealing director Edwin Cheung recommended that investors shift into conglomerates, stressing that their diversity would support their share prices, while the rest of the market floundered. China plays are expected to remain hot, as indicated by yesterday's more than 300 per cent rally by Gitic Enterprises on its first day of trade.