Hang Seng Index (HSI) rose on Wednesday, its biggest gain in two weeks, as expansion in US service industries boosted the earnings outlook of exporters, and as investors speculated US President Barack Obama will propose measures to reinvigorate the world's largest economy.

The HSI rose 1.71 percent to 20048, its steepest increase since August 23. Eight stocks gained for each that fell in the 46-member gauge. The Hang Seng China Enterprises Index increased 1.91 percent to 10544.86.

The HSI sank 14 percent this year through Tuesday amid concern US economy and Europe's debt crisis is worsening. Shares on the index traded at 10.7 times forecast earnings, compared with 11.6 times for the Standard & Poor's 500 Index.

Li & Fung jumped 5.4 percent to HK$14.44, the biggest gain in the HSI. Techtronic Industries Co increased 4.2 percent to HK$7.51.

In the US, service industries unexpectedly expanded at a faster pace in August, easing concern the biggest part of the nation's economy was slumping. The Institute for Supply Management's index of non-manufacturing businesses increased to 53.3 last month from 52.7 in July. Economists forecast the gauge would drop to 51, according to the median estimate in a Bloomberg News survey. A reading above 50 signals expansion.

US President Barack Obama, set to lay out his plans in a September 8 address to Congress, plans to propose boosting jobs growth by injecting more than $300 billion into the economy next year, mostly through tax cuts, infrastructure spending and direct aid to state and local governments.

White House Press Secretary Jay Carney refused to give details of what the president will propose, saying at a briefing that it would include "some new proposals that you have not heard us talk about."

Cnooc rose 2.3 percent to HK$14.20. PetroChina Co advanced 3 percent to HK$9.69.

Crude for October delivery rose as much as 1.6 percent to $87.42 a barrel in electronic trading in New York on Wednesday amid signs of shrinking crude stockpiles in the US and speculation a storm building in the Gulf of Mexico posed a threat to supply in the world's biggest consumer of the commodity.Industrial & Commercial Bank of China rose 2.4 percent to HK$5.04. China Construction Bank Corp gained 2.5 percent to HK$5.73.

The People's Bank of China may ease its monetary policy by a "certain amount" in the next several months, adding cash to the market by buying bills from banks in open-market operations or cutting the required reserve ratio for banks, China Securities Journal said in a commentary, written by Zhang Zhaohui, a reporter at the newspaper.

China Gas Holdings Ltd jumped 4 percent to HK$2.62 after signing an agreement with Hubei Province Natural Gas Development Co to expand its business.

Futures on the HSI rose 1.4 percent to 19970. The HSI Volatility Index sank 5.5 percent to 32.31.

Bloomberg

(HK Edition 09/08/2011 page2)