Hong Kong stocks rose, as insurers extended their gains, and as commodity producers climbed on higher oil and metal prices.

The Hang Seng Index (HSI) rose 0.4 percent to 23,649.48 at the close, with five stocks rising for every four that fell on the 45-member gauge. The gauge fell as much as 0.5 percent Thursday, and is set for its first weekly drop since the period ended August 27. The Hang Seng China Enterprises Index rose 1.2 percent to 13,615.41.

"Insurers hold 90 percent of their investment in government bonds," said Francis Lun, general manager at Fulbright Securities Ltd. "A quarter percent rate hike will increase their income substantially." China's central bank raised one-year lending and deposit rates by 25 basis points on October 19.

Ping An jumped 3 percent to HK$88.15, the second-biggest gain on the HSI. China Life Insurance Co climbed 1.3 percent to HK$36.45. The two largest life insurers in China extended Wednesday's gains after Mirae Asset Securities Co said life insurers will outperform in a rising interest-rate environment.

Cnooc rose 1 percent to HK$16.08, and PetroChina Co increased 0.4 percent.

Crude oil for November delivery rose 2.9 percent to settle at $81.77 a barrel Wednesday in New York as the dollar resumed a slide, enhancing the appeal of commodities as alternative investments. The London Metal Exchange Index advanced 1.2 percent.

Jiangxi Copper Co gained 1.8 percent to HK$22.60, while Zhaojin Mining Industry Co climbed 1.5 percent to HK$24.25. Aluminum Corp of China increased 0.4 percent to HK$7.93.

"Inflation is getting out of control," said Fulbright's Lun. "China may need to raise the interest rate again before the end of this year," increasing the burden on mortgagees. "Property developers suffer the most."

Futures on the HSI rose 0.5 percent to 23,668.

Bloomberg

(HK Edition 10/22/2010 page3)