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Spectre of rate rise sends shiver through market

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FEARS of another interest rate rise, coupled with poor results for the Bank of East Asia, dampened stocks yesterday.

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The Hang Seng Index lost 71.16 points, or 0.77 per cent, to close at 9,117.66. Turnover was $3.17 billion.

US Federal Reserve chairman Alan Greenspan's comments that rates might again be raised sent a chill through the market, weakening the resolve of some of the more bullish players.

After falling for more than a week, the United States long-bond yield has sparked back up in the last two days, from 7.46 per cent on Tuesday to 7.56 per cent yesterday.

While a rate rise is not expected until next month, the seed of fear has been planted and concerns will continue to grow until the rate is increased.

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GT Management investment manager Simon Male said the market consensus saw rates rising by 50 basis points.

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