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Hong Kong stocks stage rebound on strong US Thanksgiving sales

Hong Kong stocks yesterday posted the second-biggest rally since mid-August as they joined a regional market rebound cheered by strong retail sales in the United States.

The blue-chip Hang Seng Index climbed 1,085.53 points or 4.09 per cent to close at 27,626.62. Japan ended 1.66 per cent higher while South Korea surged 4.65 per cent.

US consumers spent a more than expected US$10.3 billion on holiday purchases last Friday, the day after Thanksgiving that is treated as a retail sales indicator for holiday sales throughout the year.

Wall Street was trading lower at midday yesterday, with the Dow Jones down 0.33 per cent and the Nasdaq Composite Index off 0.63 per cent.

European markets were also weaker. London FTSE 100 Index fell 1.27 per cent in late trade.

'The Hong Kong market will probably be comparatively more stable in December than this month as most of the hedge funds have already locked up their profits,' said Patrick Yiu Ho-yin, an associate director at CASH Asset Management.

Mr Yiu said the Hang Seng Index might rise to 28,200 points in the coming weeks as the US consumer market was not as bad as expected.

Shares of Li & Fung, which mainly exports goods to the US, climbed 5.87 per cent to close at HK$30.65.

The H-share index rose 5.42 per cent or 850.66 points to 16,542.37, boosted by PetroChina and Sinopec Corp, which gained 6.02 per cent and 9.5 per cent, respectively.

The mainland's two bourses bucked yesterday's bullish trend, falling after a senior mainland official indicated Beijing might keep tightening monetary policy. 'There is still plenty of room for the central bank to tighten monetary policy measures to control money supply growth,' said Fan Gang, an adviser to the People's Bank of China.

The Shanghai Composite Index dropped 1.46 per cent while the Shenzhen index lost 1.03 per cent.

Market watchers said the strong performance in Hong Kong was also helped by bargain hunting.

'The Hang Seng Index may try to go up to 28,100 points this week,' said Louis Wong Wai-kit, a research director at Phillip Securities. 'Investors will buy more stocks in December as they find the market's price-earnings ratio low and attractive.

'But it is too early to say the downward trend of the stock market has ended as investors are still doubtful about US economic growth in 2008.'

He said several US economic indicators, including new home sales and durable goods new orders to be released this week would have an effect on global stock markets.

'Investors are still bullish on the global stock market after the plunge in the past few weeks,' said Paul Pong, the managing director of Pegasus Fund Managers. However, it would be difficult for the Hang Seng Index to rise above 30,000 points again unless Beijing approved the 'through-train' scheme.

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