Hong Kong main share index closes at highest in over 3-1/2 years

HONG KONG, July 28 Mon Jul 28, 2014 4:11am EDT

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HONG KONG, July 28 (Reuters) - Hong Kong's benchmark index finished at its highest level in more than three years on Monday, as Chinese banks jumped after a Reuters report said the country's fifth-biggest bank by assets planned to seek more private investors.

The Hang Seng Index closed up 0.9 percent at 24,428.63 points, its strongest since November 2010.

The China Enterprises Index of the leading offshore Chinese listings in Hong Kong climbed 0.7 percent at its highest close since December 11.

China's Bank of Communications Co Ltd (BoCom) plans to sell stakes to private investors under a government reform aimed at letting private capital play a bigger role in the economy, two people familiar with the matter told Reuters on Friday.

The bank's Hong Kong listing jumped 6.2 percent to an almost 8-month high, leading gains on the Hang Seng. Other Chinese banks were broadly stronger, with the "Big Four" state banks adding 1 to 3 percent.

The sector was further supported by the issuance of preference shares by the country's biggest lender Industrial And Commercial Bank Of China, which helped relieve fears of dilutive common capital raisings as Chinese banks rush to replenish their balance sheets to meet new global rules.

Top index boost Tencent rose 3.2 percent. It won approval from China's banking regulator late on Friday to set up a bank in the Qianhai economic zone in southern China's Guangdong province with two local firms. (Reporting by Grace Li; Editing by Kim Coghill)

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