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HK stocks end lower,

weighed down

by bank stocks

HONG KONG: Hong Kong stocks on Tuesday finished with a moderate loss led by a sharp decline in the banking sector.

Analysts said bank stocks were hit by growing concern that increasing competition for mortgage loans would crimp their profits. "It's not new, it's just suddenly not being ignored anymore," Alan Hutcheson, research director at Deutsche Morgan Grenfell said of mortgage competition. "We're seeing daily evidence of it so people can't ignore it."

The Hang Seng index ended down about 21 points at 10,889, compared with a 10,961 session high and 10,840 session low.

The Hang Seng's 0.19 percent drop paled in comparison to the 1.26 percent slide in the finance sub-index, which fell 130 points to 10,160.

Brokers said investment funds were among the heaviest sellers of bank stocks. The decline was led by Hang Seng Bank, which tumbled HK$2.25 to HK$77.25.

Other leading bank stocks also fell, with HSBC slipping HK$0.50 to HK$115.50, Bank of East Asia losing HK$0.45 to HK$26.25 and Wing Lung Bank dropping HK$0.90 to HK$43.80.

The selloff in banking stocks masked strength in utility and property stocks, which continued to benefit from bargain hunting, said Micheal Ng at Sassoon Securities.

But he said buying interest was selective, with overall activity remaining quiet.

Turnover came to HK$3.88 billion, down slightly from the HK$3.99 billion recorded on Monday.

With investors uncertain about U.S. interest rates and China's Most Favoured Nation (MFN) trading status with the U.S., the market was expected to continue to bounce around in a narrow trading range defined by 10,800 and 11,200, analysts said.

News of slower throughput at Hong Kong's busy container terminals in March drew sellers to terminal operators COSCO, which lost HK$0.50 to HK$5.45. Wharf (Holdings) Ltd, which also has a terminal operation, eased HK$0.15 to HK$28.50 but Hutchison Whampoa, which controls Hong Kong International Terminals, gained HK$0.20 to HK$47.80.

China-incorporated H-shares bucked the broad market trend but saw limited buying interest. The H-share index rose 0.53 to 819.11.-Reuter