Hong Kong markets retreat (MarketWatch) (22-02-2008)

HONG KONG (MarketWatch) -- Hong Kong markets retreated from the previous session on Friday on a report that the local government lost money on its investment in shares of the bourse operator.

Hong Kong's Hang Seng Index dipped 1.35% to 23,305.04 and the Hang Seng China Enterprises Index of China-related stocks sank 1.66% to 13,336.89.

Hong Kong, which is caught between the economic growth problems in China on the one hand and U.S. on the other, follows U.S. interest rate changes as the two currencies are locked. Hong Kong has slashed interest rates in the past few months, despite relatively stronger growth rates than the U.S., raising fears about higher inflation.

Hong Kong is due to release its January consumer price inflation data later on Friday. IFR Markets estimates inflation likely accelerated to 4% from 3.8% in December.

Source: MarketWatch