Hong Kong shares failed to capitalise on further strength in HSBC yesterday, with technical selling linked to the futures market pushing the benchmark index lower.
However, brokers said the market stood up well given a 1.52 per cent fall on Wall Street on Wednesday as United States bond yields continued to rise.
Turnover was $3.56 billion, down from Wednesday's $5.3 billion, which had given brokers hopes for further market gains.
The Hang Seng Index fell 0.2 per cent to close at 9,658.07 points after swinging between a low of 9,657.42 in the morning and high of 9,687.85 in the afternoon.
Index arbitrageurs were active short-sellers of liquid stocks such as China Telecom, Hutchison Whampoa, Cathay Pacific and HSBC with short-selling representing 15 per cent of market turnover.
Brokers said arbitrageurs were taking advantage of increased supply of stock available for borrowing to arbitrage the cash-futures spread.
