* Commodities gain on rise in gold, oil prices
* Banks up on expectation China may raise rates in Q1 2010
* Li & Fung rallies to highest since May 2008
(Updates to close)
By Jun Ebias
HONG KONG, Oct 7 (Reuters) - Hong Kong stocks closed up 2.07
percent on Wednesday at a two-week high, as higher commodity
prices spurred resources shares, while banks rose on prospects
that China may lift interest rates sooner than expected.
Commodity goods exporter Li & Fung (0494.HK) advanced 6.64
percent to HK$31.30, its highest since early May 2008. A recovery
in the global economy, underscored by Australia's rate increase
on Tuesday, is expected to lift demand for its products abroad.
Gold eased, but hovered near record highs XAU= as the
dollar's weakness and inflation worries raised bullion's appeal
as a hedge. Oil prices surged on optimism that global demand was
picking up. [ID:nSP350833]
"Generally, a lot of the moves we've seen in the past several
days were related to the weakness in the U.S. dollar and this has
boosted commodity H shares," said John Mar, co-head of sales
trading, Daiwa Securities SMBC.
The benchmark Hang Seng Index .HSI was up 430.06 points at
21,241.59, the highest since Sept. 23. Turnover rose to HK$65.8
billion ($8.5 billion) from HK$56.3 billion on Tuesday.
Investors would probably continue to take cues from overseas
markets until China markets resumed trading, analysts said.
"With China on holiday, there is actually not a lot of
guidance in the Hong Kong market. It's moving a lot based on
global markets. As long as global markets continue to be
resilient, I think the market here will be resilient as well,"
Mar said.
Banks gained on expectations that China's central bank may
raise interest rates by as early as the first quarter of 2010,
following a similar move by Australia. Higher rates would lift
interest margins, analysts said.
China Construction Bank (0939.HK) advanced 3.19 percent,
while Bank of China (3988.HK) rose 3.37 percent.
"After the rate rise in Australia, the market is expecting
other Asian central banks to follow soon, maybe starting from
next year," said Yuk Kei Lee, analyst at Core Pacific-Yamaichi.
China may raise rates as early as the first quarter of 2010,
Lee said. Previously, he had forecast Chinese policymakers to
lift rates in the third quarter of next year.
Chinese gold miners extended gains as gold continued to
strengthen. Zijin Mining Group (2899.HK) rose 4.16 percent and
Zhaojin Mining (1818.HK) closed up 4.64 percent.
Chinese oil producer PetroChina (0857.HK) advanced 3.59
percent, lifted by rising oil prices. Oil refiner Sinopec
(0386.HK) gained 2.12 percent.
The China Enterprises Index .HSCE of top locally listed
mainland Chinese companies finished up 2.78 percent at 12,319.42,
led by an 8.74 percent gain in China Shipping Container Lines
(2866.HK).
Sino Land (0083.HK) and other local developers were higher on
expectations a rebound in the economy would fuel demand for real
estate. BNP Paribas on Monday initiated its coverage of Sino Land
with a "buy" recommendation.
Sino Land rose 4.91 percent and Hang Lung Properties
(0101.HK) was up 3.99 percent.
Markets in China are closed for a public holiday. Trading
will resume on Oct. 9.
(Editing by Chris Lewis)
