A man passes by a digital display board showing Hong Kong's benchmark Hang Seng Index rising 203.72 points to 22,705.05 yesterday. AP

Hong Kong shares bucked their downward slide from last week and overcame a dip in the United States stock market to rise nearly 1 percent yesterday.

The unexpected jump came in part from speculations of another interest-rate cut in the US, as well as the announcement that HSBC Holdings wants to raise its stake in Bank of Communications (BoCom) - the mainland's fifth-largest lender.

But Castor Pang, a strategist at Sun Hung Kai Financial, attributed the positive momentum mainly to market talks, and he expects the Hang Seng Index (HSI) to fluctuate between 21,800 and 23,000 points this week.

The benchmark index rose 203.72 points, or 0.9 percent, to close at 22,705.05. That came after it dipped as low as 22,034.76 earlier in the day.

The China Enterprises Index of Hong Kong-listed mainland companies, or H-shares, fell 0.7 percent to 12,519.75. The turnover was HK$86.97 billion.

The index was expected to fall below 22,000 points yesterday after US stocks closed on Friday at their lowest point since 2006. The Dow Jones Industrial Average dropped below 12,000.

The HSBC announcement included a desire to raise the company's stake in BoCom beyond the legally allowed 20 percent mark.

BoCom Chairman Jiang Chaoliang is reported to have indicated HSBC's intentions, and both lenders have agreed that HSBC would have the option to extend its stake to as much as 40 percent when regulations permit.

"Between us, there is no problem. But there is a legal barrier," Jiang was quoted as saying when he was asked whether HSBC and BoCom would try to secure an exemption to the ownership rules.

The British lender currently owns 19 percent of the shares in BoCom.

Fund managers in Hong Kong think HSBC is extending a rally after a recent stock upgrade from Goldman Sachs.

HSBC was trading up 3.2 percent late in the afternoon. BoCom shares climbed as much as 2.7 percent - the only major mainland lender to book a gain in Hong Kong yesterday.

Analysts think Hong Kong stocks also recovered on hopes for accelerated US interest rate cuts, amid fears that the world's largest economy may be slipping into a recession.

Linus Yip, a strategist at First Shanghai Securities, attributed the late-afternoon rebound to the interest-rate cut rumors.

"The market expects the Fed and the US government to attempt a number of measures to rescue the economy," he said.

Moreover, the market gathered steam in the afternoon as investors picked bargain stocks that had been oversold.

The Hang Seng Finance Index closed up 372.72 points, 1.2 percent, at 32,603 despite a weaker close in most mainland bank stocks.

Hong Kong Exchanges & Clearing, which a posted record profit growth of 145 percent, HK$6.17 billion, for 2007, gained HK$1.40 yesterday, or 1 percent, to reach HK$138.10.

Utility stocks, which cautious investors considered a safe haven, also rallied sharply. CLP Holdings surged HK$3.55, 6.2 percent, to HK$60.60, while rival Hongkong Electric jumped HK$1.50, 3.5 percent, to HK$44.50.

(HK Edition 03/11/2008 page2)