CAUTIOUS trading saw stocks edge up yesterday, but investor concerns over interest rates and the land auction today kept the market subdued. The Hang Seng Index closed 21.63 points higher at 9,174.62, a gain of 0.24 per cent. ''With the possibility of another rise in interest rates, people just don't want to chase the market,'' said a trader. Brokers said there was a lot of arbitrage-related activity coming up to expiry on Thursday, which kept the market in check. Yesterday, futures volume was 21,801 contracts with much of the activity related to roll-overs. James Capel Asia associate director John Horsham said there were still concerns that most traders were still short and there might be a squeeze towards expiry. He said fund managers did not want to be aggressive when the market was going nowhere, but that overall the outlook was quite positive. ''At 8,800 points to 9,100, you would have to be on the buy side,'' he said, adding that new Japanese funds and money was coming to the market. There have also been rumours about another important brokerage issuing a positive recommendation on Hong Kong stocks. Barings and Nomura have recently upgraded their outlook on the Hong Kong market and traders were expecting more houses to revise their positions as sentiment turned more positive. However, American investors remain uninspired by Hong Kong stocks and until they return to the market, it will be difficult for it to rally significantly. Stock salesmen said fund managers would now become more active in the market because the majority had slept through the eight per cent rally from the 8,300 level. One trader said they were likely to buy on weakness because they could not afford to miss another rally if it came along. The market is now trading in an extremely thin range and most analysts say there is more upside potential when it breaks from the 9,200 level. The immediate concern is today's Government land auction of two sites in Tai Po in the New Territories. Lehman Brothers regional property analyst Ang Lay Pheng said she was not expecting a lot of focus on the two sites, which were expected to fetch a combined total of about $1 billion. The previous benchmark for Tai Po property was set by Sino Land in March at about $4,500 per square foot. However, Ms Ang said it was unlikely the two sites would raise as much. ''In March, that price was already 40 to 50 per cent above expectations.'' She predicted the sites would fetch an average value of $3,200 to $3,400 per sq ft, which was on the high side of market predictions. Other analysts estimate the sites could fetch between $2,500 to $3,600 per sq ft. Property analysts have also been concerned by some of the sales programmes of the big developers. Historically, the approach has been to sell a block at a time, but now the developers are selling the better flats in a block with better views in order to keep up the appearance of high demand. ''The response looks good, but in reality it is not that reliable,'' said an analyst. Yesterday, trading moved in a 71-point range from 9,236.42 to 9,165.28. Bank of East Asia continued to fall, losing 30 cents to $31.40. Hang Seng Bank was also a casualty of the bank sell-off, losing 25 cents to $53.75. HSBC went against the trend, gaining 25 cents to $89.75. Cheung Kong gained 40 cents to $35.60.