Hong Kong stocks crawled up just 0.28 percent in volatile trade yesterday, as gains in mainland banks were offset by falls in energy shares.

The benchmark Hang Seng Index closed up 39.97 points at 14,384.34 after dropping to as low as 13,853.16 earlier.

Trading volume was thin as investors took to the sidelines ahead of the US presidential election, which they hope will help determine the outlook for the world's largest economy and biggest market for oil, electronics goods and other exports from Asia, Europe and the Middle East.

"A landslide victory for Barrack Obama would signal that the Americans want change and that will be a good catalyst for the market," said Jackson Wong, investment manager at Tanrich Securities.

Investors were also expecting the mainland authorities to ease monetary policy, including a further reduction in interest rates and reserve requirements on bank deposits, said Kenny Tang, research head at Redford Securities.

"The market is hoping for more rate cuts on the mainland to spur the economy and make up for the slowdown in exports," Tang said.

China Railway Construction plunged 18.47 percent after the company said its railway project in Nigeria had been temporarily suspended by the Nigerian government.

China's biggest offshore oil producer, CNOOC, slid 5.45 percent as oil prices fell further. Asia's largest oil and gas producer, PetroChina, dropped 2.52 percent.

Oil traded below $64 a barrel in Asian trade on Tuesday. "The prevalent concerns are still there: global economic recession and tight credit," said Ben Kwong, chief operating officer at KGI Asia Ltd.

"There is profit-taking pressure after Hong Kong stocks recovered a bit after their recent bottom."

Mainboard turnover dropped to HK$45.3 billion, its lowest in more than two months, from HK$52.1 billion on Monday.

The key index swung from losses to gains throughout the session.

HSBC's local unit Hang Seng Bank shot up 7.18 percent after it kept its third-quarter dividend unchanged at HK$1.10 per share.

HSBC underperformed the market with a 0.11 percent rise.

The China Enterprise Index of top locally listed mainland companies rose 0.8 percent to 6,860.88, led by a 4.74 percent jump in China Construction Bank. Top Chinese lender ICBC rose 2.15 percent.

Mainland developers and lenders extended their gains on hopes of easing credit. China Overseas Land gained 3.91 percent and China Resources Land was up nearly 4 percent.

Reuters

(HK Edition 11/05/2008 page3)