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HK shrs unable to hold gains, power stocks outperform

Published 05/03/2011, 04:33 AM
Updated 05/03/2011, 04:36 AM

HONG KONG, May 3(Reuters) - Hong Kong shares gave up slim early gains and closed lower on Tuesday as a strong performance by power producers failed to offset weakness in other large cap retail and energy counters.

The benchmark Hang Seng index closed down 0.4 percent at 23,633.3. The China Enterprises Index fell 0.8 percent.

On the mainland, the Shanghai Composite rose 0.7 percent but gains came amid light volume. Investors remain wary of further policy actions as inflation stays high even as economic growth slows.

HIGHLIGHTS:

* Independent power producers soared on Tuesday, extending their run from the previous week and bucking the trend of low volumes. China Resources Power led the charge on expectations that power shortages in China would boost demand. Its shares rose 5.3 percent on over 3.5 times their average 30-day traded volume.

* Li & Fung shares topped the worst performers' list on the benchmark, sliding 3.4 percent after brokerage Macquarie Securities downgraded the stock to "underperform" from "neutral", saying the company's lacklustre growth excluding acquisitions may make its three-year operating profit targets tough to achieve.

THE DAY AHEAD:

Trading is likely to be cautious through the week ahead of Friday's U.S. payrolls data. With first-quarter earnings from Chinese companies largely out of the way, market players will likely shift their focus back to policy announcements.

(Created by Vikram Subhedar)

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