HK shares retreat on profit-taking, property gains

HONG KONG, Apr 4 (Reuters) Hong Kong stocks surrendered earlier gains on Tuesday morning as investors booked profits after the market rallied in the previous session to breach the key 16,000 level, the highest in more than five years.

The benchmark Hang Seng index was flat at 16,059.25 by the lunch recess after opening higher.

Turnover was HK billion (US HONG KONG, Apr 4 (Reuters) Hong Kong stocks surrendered earlier gains on Tuesday morning as investors booked profits after the market rallied in the previous session to breach the key 16,000 level, the highest in more than five years.

The benchmark Hang Seng index was flat at 16,059.25 by the lunch recess after opening higher.

Turnover was HK$17 billion (US$2.2 billion), up from Monday morning's HK$15.5 billion.

''The profit-taking is quite obvious this morning,'' said Castor Pang, strategist with SHK Financial Group. ''The current factors and the fundamentals can't support the index to go up further. At this level, the upside is limited.'' Also, ahead of a Wednesday public holiday that will be observed in Hong Kong and Taiwan, ''a number of people don't want the overnight uncertainty, so they're taking their money off the table,'' said Andrew Sullivan, head of trading at Daiwa Securities.

Property shares outperformed the blue chips, with the Hang Seng property index rising 0.33 percent to 19,9942.72.

Market watchers said the U.S. soft manufacturing data released on Monday could provide a reason for the U.S. Federal Reserve to stop raising interest rates, boosting demand for interest-rate sensitive shares in the property sector.

Hang Lung Properties Ltd. extended its gains, climbing 2.6 percent to HK$15.90, having earlier hit a record of HK$16.20.

Analysts said the stock could be benefitting from expectations that the yuan would be allowed to appreciate further, which would bode well for Hang Lung, given it has projects in a number of Chinese cities.

Among the morning's decliners was Tsingtao Brewery, as China's largest beer maker slumped 3.6 percent to HK$10.80 after reporting on Monday its second-half earnings fell 5 percent from a year earlier to 133.4 million yuan (US$16.6 million) due to fierce competition from foreign breweries.

STOCKS ON THE MOVE: * GAMING STOCKS UP Macau International Development jumped 8.6 percent to HK$17.05, after setting a new high, and Shun Tak Holdings Ltd.

advanced 3 percent to HK$11.40 amid speculation that casino operator Sociedade de Jogos de Macau (SJM) could soon list on the Hong Kong exchange, analysts said.

REUTERS SS BST1226 .2 billion), up from Monday morning's HK.5 billion.

''The profit-taking is quite obvious this morning,'' said Castor Pang, strategist with SHK Financial Group. ''The current factors and the fundamentals can't support the index to go up further. At this level, the upside is limited.'' Also, ahead of a Wednesday public holiday that will be observed in Hong Kong and Taiwan, ''a number of people don't want the overnight uncertainty, so they're taking their money off the table,'' said Andrew Sullivan, head of trading at Daiwa Securities.

Property shares outperformed the blue chips, with the Hang Seng property index rising 0.33 percent to 19,9942.72.

Market watchers said the U.S. soft manufacturing data released on Monday could provide a reason for the U.S. Federal Reserve to stop raising interest rates, boosting demand for interest-rate sensitive shares in the property sector.

Hang Lung Properties Ltd. extended its gains, climbing 2.6 percent to HK.90, having earlier hit a record of HK.20.

Analysts said the stock could be benefitting from expectations that the yuan would be allowed to appreciate further, which would bode well for Hang Lung, given it has projects in a number of Chinese cities.

Among the morning's decliners was Tsingtao Brewery, as China's largest beer maker slumped 3.6 percent to HK.80 after reporting on Monday its second-half earnings fell 5 percent from a year earlier to 133.4 million yuan (US.6 million) due to fierce competition from foreign breweries.

STOCKS ON THE MOVE: * GAMING STOCKS UP Macau International Development jumped 8.6 percent to HK.05, after setting a new high, and Shun Tak Holdings Ltd.

advanced 3 percent to HK.40 amid speculation that casino operator Sociedade de Jogos de Macau (SJM) could soon list on the Hong Kong exchange, analysts said.

REUTERS SS BST1226