950811

HK stocks end

1.5 percent off

HONG KONG: Increasingly bearish sentiment caused stocks to fall out of their recent trading range, brokers said.

The Hang Seng Index ended down 135.62 points or 1.48 percent at 9,006.93. The day's low was 8,952, marking the first time the main index has been below 9,000 since May 22.

Turnover swelled to HK$4.35 billion from HK$4.18 billion on Thursday.

"The market was locked in range between 9,200 to 9,450 for a long time. Now it's breaking down, out of the range," said Boby Ho, dealing manager at G.K. Goh Securities.

"People are concerned about Sino-U.S. relations and China's testing of missiles near Taiwan," Goh said.

Some brokers said there was talk in the market that foreign funds were cashing out of Hong Kong stocks following the Moody's Investors Service warning this week that the Hong Kong dollar was vulnerable to speculative attack.

"I've heard rumours of Japanese selling...it may be part of the reason (the index is down) but the selling is not that big," said Simon Gard, head of derivative sales at Kleinwort Benson.

However, Gard said that the Moody's report was just being used as an excuse to sell.

Friday's decline was the second consecutive day of sharp drops in the blue chip index.

On Thursday, the Hang Seng Index ended trade 159.10 points down at 9,142.55.

Gard said the index should rebound next week as HSBC Holdings and Hang Seng Bank announce results.

"Given that the results should be okay, the market should recover. It's at the low end of the range now and it should be a reasonable buy at this level."

August index futures last traded at a 27-point discount to the spot index at 8,980 on 18,982 contracts traded.

The index monitoring shares of mainland China companies listed in Hong Kong was down 16.59 points (1.63 percent) at 999.88.-Reuter