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Merger talk fuels sharp rise in index

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The Hong Kong share market rose 2.39 per cent yesterday, buoyed by a resurgent HSBC, lower interbank rates and a firmer tone in many regional markets.

The Hang Seng Index leapt 265.03 points to 11,314.46 as HSBC gained on merger and acquisition speculation in the wake of the planned Citicorp-Travelers Group merger.

HSBC, which accounts for 26.7 per cent of the index, gained $9, or 3.89 per cent, to close at $240, its biggest one-day gain this year. On Tuesday, it put on $3 or 1.3 per cent.

Merrill Lynch banking analyst Keith Irving said 'there seems to be a couple of strong rumours' concerning possible HSBC acquisitions.

Property stocks also rallied, led by Cheung Kong, which rose 5.76 per cent to $55.

The Hong Kong market rose in line with other regional markets. Tokyo recovered 2.49 per cent - its third straight gain - on hopes for tax cuts to spur the economy, while Bangkok led the region with a 3.32 per cent gain.

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