Hong Kong shares -- 2 (rate cut hopes boost buying: analyst)

At 12:00 noon, the Hang Seng Index was up 349.77 points at 13,735.81 on turnover of 5.35 bln hkd.	    The Hang Seng May contract last traded at 13,710 points.	    Lai of OCBC Securities said despite stronger than expected U.S. first quarter GDP growth, investors are still expecting the Federal Reserve to cut interest rates further.	    "Rate cut hopes are fuelling the current buying and boosting interest rate sensitive stocks," he said.	    HSBC rose 2.00 to 101.00 hkd, while Hang Seng Bank fell 0.50 to 91.50.	    Bank of East Asia gained 0.25 to 17.95, and Dao Heng Bank was unchanged at 58.00.	    Cheung Kong rose 1.75 to 88.75, Sun Hung Kai Properties gained 0.25 to 72.75, Henderson Land added 0.20 to 36.00 and New World Development rose 0.15 to 9.85.	    Chu Siu Wah, head of research with G.K. Goh Securities, said it is too early to say whether the U.S. will be able to sustain its first quarter economic growth level in the second quarter.	    "The market already has a consensus that the Fed will cut interest rates by 25 basis points in mid-May, while some even expect a 50 basis point reduction," Chu said.	    However, after the series of Fed reductions since the beginning of this year, "interest rates are close to the bottom," he said.	    Chu said the Fed may be reconsidering the possible impact on inflation of having a loose monetary policy.	    "As the rate reduction cycle is coming to an end, investors should be cautious when they pick up interest rate sensitive stocks," he said.	    Chu said he prefers defensive utility stocks, conglomerates and cyclical stocks, such as retailers.	    Hongkong Electric rose 0.06 to 26.65, while Hong Kong and China Gas fell 0.05 to 9.25 and CLP shed 0.10 to 32.60.	    Giordano gained 0.025 to 4.075 and Esprit added 0.20 to 9.05.	    MTRC fell 0.05 to 13.40 after a report said the government has decided on a land premium of 1,200 hkd per square foot for the company's Ping Shek development project.	    Dealers said China related stocks continued to gain in line with the broader market.	    China Eastern Airlines rose 0.09 to 1.21 and China Southern Airlines gained 0.175 to 2.575 after they said their parent companies will conduct negotiations with other airlines on the mainland over possible cooperation.	    China Resources Beijing Land rose 0.175 to 2.175 and Denway Motors added 0.15 to 2.475.	    Guangdong Kelon fell 0.16 to 1.71 after its 2000 results. 

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