Hong Kong shares close morning lower as cautious sentiment erodes early gains

HONG KONG (AFX-ASIA) - Share prices closed the morning slightly lower after early technically-driven gains were overcome by concerns about further volatility on Wall Street, dealers said. These concerns centre on the possibility of more profit warnings from U.S. high tech companies and expectations that telecom stocks will remain out of favour for some time to come. The Hang Seng index closed down 26.47 points at 13,466.56, off an early high of 13,616.68 and a low of,13,437.40, on turnover of 4.71 bln hkd. The Hang Seng March contract last traded at13,488 points. The Hang Seng China Enterprises index closed up 2.06 points at 379.46 and the CAC index down 19.72 points at 1,067.33. TraHK closed unchanged at 13.65 hkd on volume of 14.36 mln units. The GEM index closed down 0.67 points at 275.59 on turnover of 78.86 mln hkd. MTR Corp closed down 0.25 at 12.85 hkd. "We are not away from a downward trend. Although Wall Street rose overnight, sentiment here remains fragile," said Herbert Lau, head of research with Celestial Asia Securities. Lau said the movement of the U.S. market is expected to govern the future direction of the local market. He added it is possible the Hang Seng Index may test 13,000 points since valuations of local blue chips are still not attractive. China Mobile led the initial rebound this morning and closed up 0.80 at 37.60 hkd on volume of 12.23 mln shares. Hutchison Whampoa fell 0.25 to 84.50 and Pacific Century CyberWorks shed 0.05 to 4.00. SmarTone fell 0.05 to 10.55 ahead of its six months to December results. Some utilities benefited form defensive buying. Hongkong Electric rose 1.05 hkd or 3.68 pct to 29.55 hkd. HSBC rose 0.473 hkd to 97.25, Hang Seng Bank gained 1.00 to 90.00 and Bank of East Asia added 0.15 to 17.95. Dao Heng Bank fell 1.00 to 37.50 ahead of its interim results. ICBC (Asia) gained 0.15 to 6.25 following a report its parent, Industrial and Commercial Bank of China, has secured People's Bank of China approval to inject its Hong Kong operations into the locally listed unit. In the property sector, Cheung Kong fell 0.50 to 87.50 and Henderson Land shed 0.20 to 42.00, while Sun Hung Kai Properties gained 0.50 to 76.50. New World Development fell 0.80 to 10.80 ahead of its six months to December results. On the GEM board, tom.com shed 0.025 to 2.10 and Sunevision slid 0.10 to 2.275. China Everbright fell 0.65 hkd or 8.33 pct to 7.15 hkd on fears its 20 pct owned unit China Everbright Bank will delay its listing plan.

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