The Government sought to tighten its grip on speculators yesterday, driving the Hang Seng Index towards the 8,000-point level and squeezing hedge funds attempting to extend short positions in the futures market, brokers said. The leading cash index reversed early losses to finish 0.57 per cent, or 44.61 points, higher at 7,890.09 as the Hong Kong Monetary Authority (HKMA) intervened for the seventh consecutive trading day. The Government was estimated to have spent a further $4 billion yesterday, mostly in the last hour of trading, with buying focusing on the futures market and a new mix of blue-chip stocks, including Cathay Pacific Airways, Wharf (Holdings) and Cheung Kong Infrastructure. Sun Hung Kai Securities executive director Gilbert Chu Kwok-tsu said market sentiment remained confused. 'Most people are looking towards the settlement of the August futures contract on Friday - that's the key.' Traders said the Government had instituted a new tactic, selling September futures contracts, which increased the cost for speculators of rolling short positions from August into next month. The new move came as key funds showed few signs of backing down from their battle with the Government. Open interest on Monday - the latest available figures - was at a record high of more than 116,000 contracts. Macquarie Equities senior institutional sales trader Asad Sultan said: 'We are seeing some very spotty short covering, but nothing of any size.' The August futures contract - expiring on Friday - closed at a 64.91-point premium to the cash market. The stock market's gains came against a backdrop of mixed performances across regional bourses. Shares in Japan and South Korea rose but prices fell in Singapore and Taiwan. Brokers said the Government seemed to have made 8,000 points a target for the end of the week. Amsteel Securities' Darrin Chan Cheong-hei said the cash market would probably climb in the days ahead, extending its 18.46 per cent gain since intervention started on August 14. 'The Government has the firepower. They have already committed themselves 80 per cent of the way, why not go the other 20 per cent?' he said. Turnover, swollen by official buying, was $9.92 billion, the highest in more than two months. Mr Chu said there was no accurate way of determining the extent of Government intervention since it went public with its strategy on August 14 as authorities were not commenting on daily moves. 'It's all guesswork and rumour,' he said. The buying was conducted through the usual names, such as Worldsec International and Roctec Securities, but brokers said Vickers Ballas Securities was also an aggressive buyer, suggesting it too may be acting on behalf of the HKMA. In the past, the Government has favoured larger-cap shares, three of which - HSBC Holdings, Hutchison Whampoa and Hongkong Telecom - fell in price yesterday. Institutions with long-term holdings in Hong Kong equities were increasingly selling into the Government intervention, one broker said. 'They have either lost confidence in Hong Kong completely because of the political interference or they think the market is unsustainable and intend to buy back at lower levels,' the broker said. In the money market, a deliberate HKMA move to delay the lending of overnight funds until half an hour before the end of the day's trading pushed short-term interbank rates markedly higher. While the HKMA stuck to its position of not discussing its open market operations, traders believed the move was designed to raise the cost of borrowing funds for speculators to settle their Hong Kong dollar short positions created last Friday. The overnight rate touched the day's high at 14 per cent before finishing the day at 7 per cent, compared with Monday's 10 per cent. The one-month and three-month rates remained unchanged at 13.5 and 13 per cent, respectively.