Hong Kong shares rose 3.19 percent yesterday, building on the previous session's rally as governments worldwide pledged to pour cash into their financial systems.

Standard Chartered Bank was one of the biggest gainers, seeing its shares soar by nearly a fifth.

While most analysts discounted another free-fall after last week's worst-in-a-decade 16.3 percent decline, in the short term they expect global equity markets to consolidate gains as the corporate earnings season kicks off.

"The relatively small gains in the Dow and S&P futures already indicate that US stocks, especially financials, may see profit-taking after the government details the bailout plan tonight," said Philip Chan, head of research with CAF Securities. "Also, with the corporate earnings season around the corner, investors will switch their focus to slowing bottom lines and revenues."

The benchmark Hang Seng Index finished 520.72 points higher at 16,832.88, lifted by a 13.81 percent jump in CNOOC on higher oil prices.

But gains on Tuesday underperformed those in other regional markets, coming on the heels of Monday's rally and a holiday in Japan. The index retreated from earlier highs, tracking an about-face on the Shanghai bourse, which closed 2.7 percent lower on worries about the slowing economy.

Tokyo's Nikkei average rose more than 14 percent on Tuesday, while Seoul's KOSPI gained more than 6 percent.

The blue-chip index has managed to claw back most of last week's steep losses, but it is still down about 39 percent so far this year, in line with losses in shares in Singapore, Taiwan and Japan over the same period.

"We are still pretty much in line with the other regional heavyweights. Some smart fund managers predicted yesterday's big gains on Wall Street, which sparked buying in the local market," said Peter Lai, a director with DBS Vickers.

"But the mantra is still the same: 'Buy during the sharp falls, and sell on a rally'. The market will continue to fluctuate wildly between 14,000 and 19,000."

Mainboard turnover climbed to HK$81.7 billion from HK$72.6 billion on Monday.

Resource counters joined the rally after crude-oil prices shot up 4 percent overnight. China Shenhua Energy, the world's most valuable coal miner, soared 11.97 percent, while Yanzhou Coal rallied 11.72 percent.

The China Enterprises Index of top locally listed mainland companies rose 4.35 percent to 8,435.46.

Mainland bank stocks built on the previous session's sharp gains amid reports that the sovereign fund will buy more shares in big lenders to support the mainland markets.

Top lender ICBC rose 3.04 percent, while China Construction Bank advanced 3.57 percent.

The third-largest lender, Bank of China, gained 3.15 percent, while smaller rival Bank of Communications climbed 5.05 percent.

Reuters

(HK Edition 10/15/2008 page2)