Hong Kong stocks advanced 3.17 percent, lifting the benchmark index to a two-week high, on hopes that president-elect Barack Obama will take measures to boost the flagging US economy.

Following a rally on Wall Street overnight, Hang Sang Index (HSI) soared 455.82 points to end at 14840.16, adding to gains from the previous two days. The Hang Seng China Enterprises Index, which tracks Hong Kong-listed mainland companies, added 5.32 percent, or 364.81 points to 7225.69.

"It is a good result for the market, now the certainty is lifting," said Michael Spencer, an economist at Deutsche Bank. "The new president will focus on improving the economy," he said.

Shares in US market-focused companies recorded growth. Li & Fung Ltd, the largest Asian supplier of toys and clothing to giant US supermarket Wal-Mart Stores Inc, jumped 8.83 percent and closed at HK$17.26. Foxconn International Holdings Ltd, the world's biggest contract maker of mobile phones, advanced 3.2 percent to HK$2.89.

"Sentiment has improved as people are expecting that the worst is already over," said Francis Lun, general manager at Fulbright Securities in Hong Kong. "It is being speculated that the new president will introduce measures that will help improve the economy and the markets."

Financial stocks also saw steady upsurge on lower borrowing costs. BOC (Hong Kong), Bank of China's Hong Kong operation, increased 17.15 percent and ended at HK$9.7, the sharpest jump on the HSI yesterday. The city's largest local lender Bank of East Asia advanced 10 percent to HK$17.6. While European banking giant HSBC gained 2.53 percent to HK$94.95.

Hong Kong's three-month interbank offered rate (Hibor) dropped 24 basis points to the lowest since Sept 17, following the SAR government's funds injection. The Hong Kong Monetary Authority added HK$814 million to the banking system late Tuesday.

However, the government's capital injection and the election of new US president will only give a transient stimulation to the stock market, said Ben Kwong, head of research at KGI Asia.

"The financial market is embracing a honeymoon period as the young and energetic new US president refreshes the world with new hope, but the economic downturn needs some time to recover and return to how it was before."

China National Offshore Oil Corporation (CNOOC), one of the country's three largest oil companies, climbed 5.76 percent to HK$6.61. China National Petroleum Corporation, or PetroChina, Asia's biggest oil producer, advanced 4.3 percent and closed at HK$6.05.

Crude oil futures jumped 10 percent to $70.53 a barrel in New York on Tuesday.

(HK Edition 11/06/2008 page2)