Rising crude prices put industry back in favour, but trading volume remains thin Hong Kong stocks rose for a second day in a row yesterday with oil stocks leading the advance on the back of the latest surge in crude oil prices. But with just $12.05 billion worth of shares changing hands, trading remained thin. Many investors opted for the sidelines ahead of the release of key US data that would provide clues on how fast interest rates would rise in the world's largest economy, traders said. Peter Lai Wing-leung, director of sales at DBS Vickers, said the local market's 'fundamentals are good'. 'But investors need concrete signals such as a strong US economic performance to encourage them to buy,' he added. The Hang Seng Index hit an intraday high of 13,567.94 before giving up some of its early gains to close at 13,501.63, up 57.54 points, or 0.42 per cent, from the previous close. Traders said the gains were technical after the market on Monday suffered its biggest single fall since June. 'The market lacks momentum as it fell with strong turnover but recovered with thin trading,' said Sun Hung Kai Financial strategist Castor Pang. 'It has difficulty breaking the 13,600 barrier.' The oil and resources sub-index, which tracks 10 stocks, rose 1.4 per cent to 4,596.04 after New York crude futures climbed 3.8 per cent on Tuesday night to US$52.29 a barrel. CNOOC, the mainland's largest offshore oil producer, climbed 10 cents, or 2.48 per cent, to $4.125, after UBS raised its earnings forecast for this year by 13 per cent and for next year by 7.3 per cent. PetroChina, the mainland's No1 oil producer, climbed 0.52 per cent to $4.80, but Sinopec ended flat at $3.025. 'Oil futures will stay firmly over US$52 a barrel despite heavy speculative trading in the futures market,' Mr Pang said. However, Louis Wong Wai-kit, head of research at Phillip Securities, disagreed. 'It climbed back to over US$50 because of the recent supply disruption. US oil demand is cooling down. 'With market speculation of yuan appreciation and the Hibor [Hong Kong interbank offered rate] falling below 2 per cent, it suggests an inflow of hot money,' said Mr Wong, who expected the benchmark index to trade between 13,000 and 13,600 in the near term. Banking stocks outperformed yesterday, with the finance sub-index shooting up 105.89 points to 26,387.63. HSBC and Hang Seng Bank both added 50 cents to $123.50 and $103, respectively. Property developers advanced slightly during early trading with investors betting luxury residential prices would rise. However, Sun Hung Kai Properties, despite strong sales of its project The Arch, remained unchanged at $71.50. Telecommunications stocks had a mixed performance following the launch of another price war. New World Telecom joined the fray yesterday with a package that allows customers to make unlimited international calls for $36 a month. City Telecom and Hutchison Global had already launched similarly priced packages. City Telecom rose 0.99 per cent to $1.02 while Hutchison Global shed 4.44 per cent to 43 cents. Although China reported its economy grew by a better than expected 9.5 per cent in the first quarter, the H-share index ended down 2.1 points at 4,652.06 after having risen almost 1 per cent earlier. Jilin Chemical Industrial shed 15.61 per cent to $1.73 after it reported a 43 per cent drop in first-quarter earnings. Lianhua Supermarket saw its share price slip 2.43 per cent to $8. China's largest retailer, with 3,123 outlets, said it would open 600 new stores this year. Dealers said they were focused on next Thursday's listing of Shanghai Electric Group. The initial public offering subscription closes at noon today. 'Investors are optimistic about the IPO amid a quiet market,' Mr Pang said. 'Subscribers are likely to pocket some profit on the first trading day.' Shares in KWah Construction Materials plunged 11.76 per cent to $8.55 on profit-taking after Tuesday's news that the company had bought Macau's Galaxy Casino for $18.4 billion, making it the first Hong Kong-listed firm to own a gaming licence. Last night, the firm was placing 253.8 million new shares to raise as much as $2.16 billion to finance the casino acquisition. Parent KWah International shed 19.43 per cent to $2.425, while Melco International Development fell 3.16 per cent to $19.90.