The Hang Seng Index finished higher yesterday for the second consecutive day, guided up late in the day by an upward trend in Tokyo and short covering in index futures. The blue-chip index recovered 216.44 points to end 1.78 per cent stronger at 12,363.56 points. Turnover edged up to $4.4 billion from Monday's $4.02 billion. 'Turnover at 3pm was only $2 billion, and then people got over-excited about [Tokyo's] Nikkei being stronger,' a broker said. Investors in Hong Kong were cautious without Wall Street to influence trade, brokers said. Markets in the United States and Britain were closed on Monday for public holidays. In Tokyo, the Nikkei-225 Index rose 296.85 points, or 1.84 per cent, to 16,408.5. 'The Tokyo market did quite well, and although the unemployment rate in Japan was pretty bad, the Nikkei stayed quite firmly above 16,000,' Celestial Asia Securities research manager George Chan Lung-Cheung said. 'That was why there was short covering on the futures market [in Hong Kong]. 'HSBC was quite strong, and that gave it a boost.' June index futures closed 165 points higher at 12,385, as did July futures at 12,425. HSBC added 2.32 per cent to $264, while Hang Seng Bank gained 2.74 per cent to $84.25. New World Development, which put on 6.76 per cent to $21.30 on renewed speculation it was in talks with MCI WorldCom regarding its fixed-line network. The company denied the market talk. Cathay Pacific Airways rebounded after a steep drop on Monday in response to a pilots' pay dispute. The stock ended 2.34 per cent higher at $10.90. Parent firm Swire Pacific rose 3.35 per cent to $37. Brokers said they expected the market to take its cues from Wall Street this week, as concerns about a possible interest rate rise in the US had dominated sentiment. Investors were cautious ahead of the next US Federal Reserve meeting at the end of this month, they said. 'At the moment, the US is poised on the knife edge on whether it will go upwards or downwards very sharply,' Templeton Asset Management head of sales and marketing Stewart Aldcroft said. 'And that will probably not happen until the end of June . . . so I think it will be very slow for the next few weeks.' H shares were bolstered by Beijing's recent tax incentives aimed at lifting the mainland's B-share market, brokers said. The H-share index rose 3.79 per cent to 434.89 points.