HK stocks hit 3-1/2 year low on worrying slump in currency
* Hong Kong dollar slumps towards weaker end of trading band
* Concerns of higher interest rates due to intervention weigh
* Interest rate swaps jump sharply
* Property and resources shares particularly hit (Adds background, recasts introduction)
HONG KONG, Jan 20 (Reuters) - Hong Kong's stock market closed at a 3-1/2-year low on growing concerns a weakening local currency would force the central bank to tighten monetary policy, adding to the economic headwinds already buffeting the city.
The Hang Seng Index fell 3.8 percent to 18,886.30, its lowest level since late July 2012. The Hong Kong property sub-index slid 4.9 percent. All constituents in the benchmark index ended in the red.
Hong Kong stocks are already grappling with capital outflows and the knock-on impact of an unprecedented wave of intervention by the Chinese central bank to stabilise its the offshore yuan .
"Participants unloaded their shares as the Hong Kong dollar weakened further toward the 7.85 level," said Steven Leung, sales director at UOB Kay Hian in Hong Kong.
"Investors unloaded the shares on concern over the continuous capital outflows and rising interbank rates." Continuación...