Hang Seng Index records biggest fall in four months as US data raises rate rise concerns The slump on Wall Street on Thursday triggered massive profit taking in Hong Kong stocks yesterday, with the Hang Seng Index suffering its biggest one-day decline in almost four months. The Dow Jones Industrial Average fell 101.97 points or 0.93 per cent to 10,851.98, as reports showing higher labour costs and fewer than expected jobless claims raised concerns of stronger growth leading to inflation which could prompt the Federal Reserve to extend its campaign to raise borrowing costs. Feeding off these concerns, the Hang Seng Index tumbled 261.96 points or 1.66 per cent, ending near the intraday low at 15,429.73, its biggest one-day decline since October 12 last year. The blue-chip index ended the week down 2.05 per cent. Selling pressure was heavy with shares worth $32.13 billion changing hands, slightly lower than Thursday's $33 billion. 'The US may introduce more rate rises than the market originally expected, pushing some cautious investors to cash in their gains, pulling down the index below the technically important 15,500 level,' VC Brokerage executive director Louis Tse Ming-kwong said. The spectre of bird flu also affected the market, said Mr Tse, who predicted there would be more consolidations ahead, with the next support level standing at 15,200 points. Yesterday's correction was a broad-based one, with Lenovo being the only blue chip to buck the trend, advancing 0.78 per cent to close at $3.225. It was the market heavyweights that dragged down the index. China Mobile, HSBC, CNOOC, Hutchison and Cheung Kong alone accounted for 60 per cent of the index's losses. CNOOC slid 3.76 per cent to $6.40 after oil prices softened to almost a three-week low as the US said it would not immediately seek sanctions against Iran, allaying worries that the world's major oil producer would hit back with an export cut. Hutchison fell 1.94 per cent to $75.85 after news that its 3 Italia spin-off may be delayed until later this year due to insufficient financial details. Rate-sensitive property stocks extended their losses, with Hang Lung Properties leading the index losers, falling 6.33 per cent to $14.05. New World Development fell 2.12 per cent to $11.55 and Henderson Land lost 2.05 per cent to close at $38.20. Looking ahead, SG Securities sales trader Andrew Clarke said the blue-chip index was likely to be rangebound between 15,400 and 15,800 in the short term and would see a clearer direction during the upcoming reporting season. He said the slump in the H shares was a simple story as investors started taking profits after accumulating huge gains. Yesterday, the H-share index plummeted 161.58 points or 2.53 per cent to finish the day at 6,202.28, offsetting the sharp rally on Wednesday and taking the losses to 1.19 per cent for the week. Mainland insurance, banking and oil stocks, which have topped investors' buying lists in the past month, experienced heavy sell-offs yesterday. Sinopec retreated 4.71 per cent to $4.55 and PetroChina dropped 2.61 per cent to $7.45. Ping An Insurance declined 4.36 per cent to $16.45, PICC Property and Casualty fell 3.85 per cent to $2.50 and Bank of Communications finished 3.33 per cent lower at $4.35. 'It's understandable for hedge funds to take profit after H shares had risen over 16 per cent in the past month. The index will regain support as long as hopes of a possible yuan revaluation prevail,' Mr Clarke said. The H-share index has surged 16.3 per cent since the beginning of the year.