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SCMP Reporter

ECONOMIC data from the United States - hanging over the local market in the early part of the week - guided a directionless Hong Kong market to fresh highs at the close.

 Released on Wednesday night, the US consumer price results are a pointer to whether the Federal Reserve will be pushed to raise interest rates at the end of the month and by how much.

 The figures remained unchanged - a relief from April's 0.7 per cent rise - and Asian markets surged on Thursday following the release of the data.

 Hong Kong was closed on Friday for the annual Dragon Boat Festival.

 Analysts said the US inflation data was good news as it confirmed market expectations that the US Federal Reserve would probably only lift interest rates by 25 basis points at the end of the month and that it was likely to be a one-off rise.

 Comments by Federal Reserve chairman Alan Greenspan on Thursday, the day after inflation data, have also been read by the market as an indication there will be a minimal rise in interest rates.

 At the start of the week, the Hang Seng Index finished higher than 13,000 points on the back of gains in heavyweight HSBC Holdings.

 They said investors were taking positions in the stock before its impending three-way share split.

 Despite the higher close, sources said the impending US inflation data had hung over the market and foreign buying had been minimal.

 'Interest rates are one of the major concerns,' one analyst said.

 On Tuesday, a sea battle between the North and South Koreans over disputed territory gave markets a jolt.

 'I think this effected sentiment in the whole region,' Cresvale Far East sales head Stephen Cheng said.

 'Everything closed down except Japan.'  Profit-takers, cautious ahead of the US figures released on Wednesday night, also sent the Hong Kong index lower.

 The Hang Seng dropped to close on Tuesday down 72.16 points to 12,935.41.

 But buoying sentiment was a steady stream of corporate news, including the name change of Hongkong Telecom to Cable & Wireless HKT.

 The move is designed to realign the group with its parent, Cable & Wireless. The company also announced that Cable & Wireless HKT was looking to create a more global presence in the increasingly competitive telecoms sector.

 Its stock finished the week 1.51 per cent higher at $20.10.

 Property plays dominated the index on Wednesday amid rumours of a decision on a tender for a luxury residential site in Kowloon Tong.

 Prior to the results, analysts said the bids received were as high as $3.15 billion, more than previously expected.

 Cheung Kong Holdings emerged the winner on Thursday, with an aggressive bid of $3.24 billion.

 Cheung Kong's stock ended the week 2.31 per cent stronger at $66.25.

 Red chips and H-shares also surged early in the week in the wake of Beijing's ringing endorsement of its domestic stock markets and a recent interest rate cut.

 Profit-takers came in on Tuesday, but some analysts predicted continued strength.

 'H-shares and red chips are at the bottom of the cycle,' BNP Peregrine's Jason Ho Ka-keung said.

 'In general, we are expecting at least a 100 to 200 per cent upside from here for H-shares.'  Although the local market ended the week up 1.92 per cent at 13,408.27 points, Mr Greenspan's comments may send a note of caution to investors.



US data fuels rise in HSI