HONG KONG (Dow Jones)--The Hong Kong dollar fell against the U.S. dollar Wednesday due to declines in local shares, though a U.S. bank's sales of the U.S. unit pared the Hong Kong dollar's decline. Traders said they expect the U.S. dollar to maintain its strength in the near term amid a general increase in risk aversion, due to the U.S. dollar's status as a safe-haven currency. They said they expect the U.S. dollar to trade between HK$7.7690 and HK$7.7740 Thursday. In late Asian trade, the U.S. dollar was at HK$7.7716, up from HK$7.7685 late Tuesday. The U.S. unit was fixed at HK$7.7719 earlier Wednesday. "Some local banks are buying the U.S. dollar for short-covering, and the weaker local stocks also prompted some selling of the local currency," said a senior trader at a Singapore bank. Hong Kong shares fell 1.5% to 21,088.86 Wednesday due to profit-taking after a five-day winning streak and because of a sharp decline in China Mobile following Vodafone's sale of its stake in the index heavyweight. "There is a lot of speculation that after Vodafone's sale of their stake in China Mobile, they need to buy the U.S. dollar, to be exchanged back to the British pound in the U.K.," a trader at a U.K. bank said. Vodafone, the world's biggest mobile operator by revenue, said late Tuesday it sold its 3.2% stake in China Mobile for GBP4.3 billion before tax and transaction costs. Vodafone sold the shares at HK$79.20 each. "Despite the weakening risk appetite, I spotted a U.S. bank selling (the U.S. dollar) near the level of HK$7.7730, in a transaction of about US$200 million to US$300 million, forming a strong resistance there," the trader at the Singapore bank said. The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 165 points to the spot rate, unchanged from late Tuesday. -By Chester Yung, Dow Jones Newswires; 852-2832 2331; chester.yung@dowjones.com

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