Health-care stocks also saw strong buying, with Town Health International jumping 8.2 per cent to 21 cents and Quality Healthcare Asia adding 3.4 per cent to $2.275.

Francis Lun Sheung-nim, general manager at Fulbright Securities, said fears over the possibility of a bird flu outbreak in Hong Kong had prompted the rush on pharmaceutical stocks.

However, brokers warned that these companies did not make the antiviral drug Tamiflu and might not benefit directly from the possible outbreak. But what was good for pharmaceuticals was bad for the market overall as concerns over bird flu cast a pall over the index which encountered resistance when it tested the 14,500 level.

The Hang Seng Index fell 63.12 points at one point after the afternoon session opened, before finishing the day higher at 14,458.14, gaining 33.26 points or 0.23 per cent.

Shares worth $16.07 billion changed hands compared with $16.42 billion on Tuesday.

Brokers said the sharp fall in the afternoon was driven mainly by the slump in the mainland stock market which was used as an excuse by the bears to knock down the index ahead of the futures expiry tomorrow.

HSBC contributed most to yesterday's gain, adding 0.5 per cent to $121.50. CNOOC was another index upside engine, surging 1.54 per cent to $4.95.

Denway Motors, yesterday's worst index performer, closed down 4.17 per cent to $2.30 which took its losses in the past seven trading days to 14.8 per cent.

Hit by the bird flu outbreak, the mainland stock market experienced a comprehensive slump yesterday. Both the Shanghai Composite Index and Shenzhen Composite Index dropped more than 2 per cent.

The local H-share Index also ended the day lower at 4,800.84, losing 34.77 points or 0.72 per cent. Among the 40 constituents, only six managed to escape from the across-the-board correction.

China Southern Airlines sank 3.11 per cent to $1.87 on worries that the spread of bird flu would dent travel demand. Air China, the country's largest airline, fell 1 per cent to $2.375. Cathay Pacific Airlines inched down 0.39 per cent to $12.75.

Poor market conditions pushed Guangdong Nan Yue Logistics to a disappointing result in its trading debut yesterday, closing with a loss of 10 per cent at $3.10.

Shares in Nan Yue traded below the offer price of $3.45 the whole day, losing 10.8 per cent to $3.075 at one point following the broad-based market correction in the afternoon, with turnover of $184 million.

It was the second newcomer in the past week that failed to close above the offer price.

Upholstery furniture and leather products manufacturer Kasen International was the first, falling 6.86 per cent to $2.375 on its first day of trading.

The company priced its $775.76 million share offer at the bottom end of the range at $2.55 after thin demand had left its retail tranche only 23 per cent covered.

Compared with Kasen, Nan Yue's poor performance on the first trading day surprised the market as its flotation lured investors by the fact that its retail tranche was 10.7 times subscribed.

A banker said the lacklustre investor interest toward IPOs would make it harder to support new listings share prices.