But the actual Hang Seng Index will open higher than the current estimate of 11,084, brokers said.

Mr Chin said the major concern was the upward trend of interest rates.

Michael Ng Wai-ming, assistant general manager of Sassoon Securities, said the market would find strong support at 11,000 points.

''The market will open lower but bargain hunting from local investors may give support to the index,'' Mr Ng predicted.

He expected some adjustments to the market tomorrow but said a crash was unlikely.

China's moves to re-open the stalled airport talks will offset the gloomier sentiment with some analysts predicting construction stocks and finance counters going against the general trend.

Guo Fengmin, the Joint Liaison Group's Chinese team leader, said that China wanted to re-open talks in the new year.

Brokers are becoming indifferent to traditional expectations of a Lunar New Year rally.

In the past, it was taken as a good omen for the year if the market went up on the first trading day after festivities.

''Market sentiment was destroyed by the US rise in interest rates [last] week,'' said Samuel Lau Kwok-leung, research director of Seapower Securities.

Mr Lau expected the market would be quiet for at least one to two weeks because of the interest rate rise.

However, he suggested a buy on trading hongs, and a selective buy on industrial stocks, as a consumption recovery in the US was expected.

The trade row between the US and Japan would not affect the Hong Kong market, brokers said.

But Mr Lau warned investors not to buy utilities stocks because they were not as defensive as in the past.

The market has rallied after the Lunar New Year in nine of the past 12 years.

The exceptions were 1982 (the Year of the Dog), 1985 (the Year of the Ox) and 1990 (the Year of the Horse).

The Hang Seng Index dropped 6.93 points on the first trading day after the Lunar New Year in 1982.

''In 1982, market sentiment was bad when the Sino-British talks were taking place to decide the sovereignty of Hong Kong after 1997,'' said Frederick Tsang, head of Hong Kong research of Nomura Institute.

In 1990, investors were still cautious after the Tiananmen Square crackdown of June 4, 1989.

There was uncertainty over the political situation and economic policy in China, which contributed to a bad year for the stock market.

The experience of the past 12 years shows that a rally after the Lunar New Year does not ensure the market will finish ahead for the year.

For example, in 1989 (the Year of the Snake), the market rose 96.94 points, but the index fell 10 per cent overall that year.

Conversely, in 1987 (the Year of the Rabbit), the market rose 32 points on the first day, but because of the big crash, the index went down 20 per cent at the end of the year.