Hong Kong stocks closed slightly higher yesterday in volatile trade, with HSBC continuing to lead, while blue-chip property stocks were also stronger. The Hang Seng Index closed at 14,062.37, up 20.47 points. The index recovered from a 90-point deficit in the last hour of trade. BZW assistant sales director Julian Ings-Chambers said: 'The market is trying to make up its mind if it is happy or not at this level.' Turnover was $12.73 billion, down from $16.82 billion on Thursday. Traders said the slower turnover was partly due to investors taking cash positions ahead of initial public offerings. Seapower Securities sales trader Samuel Ho said: 'I see the market in a consolidation phase. Most of the people are following the new issues.' May futures led the cash market through most of the day, before flagging near the close. HSBC, parent of Hongkong Bank, advanced $2 to $220 after falling as much as $3. Sentiment remained strong, but some investors questioned whether HSBC's growth earnings justified the stock's 25 per cent rally over the past six weeks, brokers said. The recent gains came amid speculation that HSBC might buy Britain's second-largest mortgage lender, Abbey National. On Wednesday, Standard & Poor's upgraded HSBC's long-term credit rating to A+ from A. Hang Seng Bank fell 1.33 per cent to $92.50, despite receiving a similar upgrade from S&P. Cheung Kong rose amid reports it might buy a stake in debt-ridden construction company Sun Fook Kong Holdings. Other property counters, such as Henderson Land, New World Development and Sun Hung Kai Properties rose as successful property sales in recent weeks have improved sentiment in the sector. Cathay Pacific Airways rose more than 2 per cent to $12. The stock is recovering from a correction earlier in the year. Swire Pacific also ended higher. Among smaller stocks, leather garment manufacturer Dragonfield advanced a further 31 per cent to $1.86 on its second day in the market. Traders called the stock highly speculative. Zhejiang Expressway, which also listed yesterday, made only limited gains. Clothes retailer Giordano International fell more than 2 per cent to $4.45, despite posting a stronger than expected 4.4 per cent rise in 1996 net profits. Traders expect the market to pause at its present level at the start of next week, ahead of Tuesday's meeting of the US Federal Open Markets Committee, which could lead to a rise in US interest rates. Mr Ings-Chambers said a wider selection of blue-chips stocks would have to advance before the index could break above its present level.