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Hong Kong: Shares end flat

[HONG KONG] Hong Kong shares ended Thursday little changed, as strength in financial and consumer stocks countered a slump in the resources sector triggered by a stronger dollar amid revived expectations of another US rate increase later this year.

The Hang Seng index fell 0.1 per cent, to 28,110.33 points, while the China Enterprises Index rose 0.2 per cent at 11,198.32 points.

The Federal Reserve on Wednesday said it would start to shrink its massive balance sheet next month and signalled one more rate hike later this year. For months, markets had been steadily dialling back expectations of a third rise in 2017.

The hawkish tone bolstered the dollar, but hit commodity prices.

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Resources shares suffered as a consequence, with an index tracking the sector slumping roughly 2 per cent.

But investors got some solace from strength in banking shares, which are expected to benefit from rising interest rates.

In an apparent effort to warn the markets against potential risks, Hong Kong's de facto central bank said on Thursday the Fed's tightening plan may lead to capital outflows from the Asian financial hub.

Hong Kong Monetary Authority (HKMA) acting chief executive Eddie Yue said that the Hong Kong dollar will likely weaken, as "the gap between Hong Kong and the US interest rate continues to widen," potentially triggering a capital outflow.