Hong Kong stocks retreated 1.59 percent on Monday in directionless trading as investors acted with caution towards the outlook for financial institutions despite the US government's rescue plan for Citigroup.

The benchmark Hang Seng Index opened at the day's lowest 12,239. 49 before the US government came up with a rescue plan for troubled Citigroup.

The market trimmed its early losses in the morning session and once bounced back 48.03 points, or 0.38 percent, to the day's peak 12,707.23 after the US government agreed to inject US$20 billion into Citigroup and guarantee hundreds of billion of US dollars in its risky assets.

But cautious investors in Hong Kong opted a wait-and-see strategy in the wake of the US government's plan to bail out Citigroup, making Monday's trading one of its quietest sessions in years. The index floated narrow-rangedly in the afternoon session before retreating 201.26 points, or 1.59 percent, to close at 12, 457.94.

Turnover fell sharply to two-year low from Friday's HK$50.44 billion (US$6.52 billion) to HK$35.02 billion (US$4.5 billion) on Monday.

Blue-chip heavyweight HSBC, the largest lender in Hong Kong that accounts for the largest weighting of the Hang Seng Index, lost 3 percent to HK$74.75, pulling down the index by 58. 82 points alone.

Another market heavyweight China Mobile, the market's largest company measured by capitalization or the country's largest telecommunication operator, dropped 2.22 percent to 66 HK dollars, dragging down the index by 39.32 points.

The Hong Kong Exchanges and Clearing Ltd. the market's sole operator, lost 1.42 percent to HK$52.25.

Local banks in Hong Kong were lower as investors weighed out the industry's outlook amid uncertainty in the wake of the US government's bailout plan for Citigroup. Hang Seng Bank weakened 2. 36 percent to HK$87. BOC (Hong Kong) plunged 7 percent to HK$7.71. Bank of East Asia dropped 1.78 percent to HK$14.32. Stanchart fell 6.38 percent to HK$88 before suspending trading in the afternoon session for an announcement of US$2.69 billion of rights issue.

Property companies in Hong Kong fell. Sung Hung Kai Property dipped 0.58 percent to HK$51.7. Cheung Kong skidded 2.06 percent to HK$65.65. Henderson Land lost 2.48 percent to HK$23.6. New World Development slumped 5.74 percent to HK$5. 26. Sino Land plunged 7 percent to HK$5.04.

The China Enterprise Index, or H-shares reflecting the performance of 42 companies registered in the Chinese mainland, retreated 48.01 points, or 0.75 percent to 6,376.96.

China's energy companies headed towards different directions. PetroChina, the country's largest oil producer, sank 1.08 percent to HK$5.51. Sinopec, Asia's largest refiner, weakened 1.6 percent to HK$4.32. CNOOC, China's largest offshore oil producer, outperformed the index by adding 1.98 percent to HK$5.16.

Banking and insurers in China were mixed. ICBC, China's largest lender, was unchanged at HK$3.35. Bank of China advanced 2. 34 percent to HK$2.19. Bank of Communications rose 1.14 percent to HK$4.44. China Merchants Bank went up 0.51 percent to HK$11.76. China Construction Bank lost 1.58 percent to HK$3.75. China Life, the country's largest insurance company, sank 2.14 percent to HK$19.22. Ping An lost 4.87 percent to HK$28.35. (HK$7.8= US$1)

(Xinhua News Agency November 25, 2008)