Index decline checked

Hong Kong stocks posted their first gains in four days yesterday as investors picked up finance issues mauled by Tuesday's 3.67 per cent plunge.

Trading was light, with many players on the sidelines amid continuing uncertainty over the direction of US interest rates.

Brokers said investors had taken some comfort from the Dow's 27.57-point advance overnight but doubts persisted about the short-term outlook.

Property counters remained subdued.

May Lam, managing director at MeesPierson Securities, said: 'It's a very quiet day. I do not think people are comfortable about the rally on Wall Street. There are still worries about further rises in interest rates.' The Hang Seng Index firmed 62.13 points to 12,136.32. It plunged 460.13 points on Tuesday on the back of steep losses in US equity prices on either side of the Easter weekend.

Turnover was $7.05 billion, down from Tuesday's $9.05 billion.

Terry Cheung, associate director at Yamaichi International, said: 'It is still quite a mixed feeling [on interest rates].' The gain in the Dow Jones Industrial Average was fuelled by the release of last month's prices-paid figures, a measure of inflation, which showed that price growth was under control. The long-bond yield dipped three basis points to 7.06 per cent, helping equities to firm.

Last week, the US Federal Reserve raised lending rates for the first time in two years. Investors suspect further tightening may be in store.

Banks led the rebound yesterday. HSBC rose 1.42 per cent to $177.50, erasing about half of its Tuesday loss. Subsidiary Hang Seng Bank climbed 1.96 per cent to $77.75.

Stanley Ng, research manager at Mansion House Securities, said: 'Banks have dropped quite a bit . . . it is time for them to rebound . . . Hongkong Bank is a multinational company. People feel comfortable with it.' He said properties continued to languish because of unease created by the Government's package of measures, announced last week, to combat speculation.

Sun Hung Kai Properties dipped 75 cents to $77.75, taking losses over the past week to 9.6 per cent.

Sino Land, which paid a record amount at a land auction last week, fell 1.32 per cent to $7.50.

Cheung Kong went the other way, adding 50 cents to $64.25.

South China Morning Post made the biggest gain within the blue-chip index. It rose 7.81 per cent to $6.90.

Mr Cheung said that with the interest rate picture unclear and reporting season largely over, blue-chip movements might be negligible over coming sessions as investors focused on new issues and speculative stocks.