Hong Kong stocks gained 2.05 per cent yesterday on the back of a strong rally in telecommunications stocks. The Hang Seng Index added 348.43 points to 17,285.24 on a turnover of $16.98 billion. Cable & Wireless HKT had a late rally after News Corp's James Murdoch said he had met Pacific Century CyberWorks chairman Richard Li Tzar-kai and both parties were 'very committed' to the Star TV-HKT pay-television joint venture. CyberWorks gained 5.79 per cent to $21.90, which also boosted HKT's stock as their merger will be financed by exchanging equity. CyberWorks was also lifted by the announcement that the firm was forming a 50-50 joint venture with the United States company SoftNet Systems to provide Internet services to Asian cable operators. Some brokers are concerned CyberWorks and HKT could enter a period of weakness over how long restructuring the merged entity to enhance shareholder value would take. 'I still expect it to take some time for the consolidation of the business,' said Ricky Tam Siu-hing, Delta Asia Securities' research manager. The market dived 141.01 points at the opening to a low of 16,795.8 on cautious sentiment before rallying. China Telecom again pushed the market up the most as investors continued to buy into mainland telecommunications and technology stocks. 'We got a lead from China Telecom,' South China Brokerage vice-chairman Howard Gorges said. China Telecom's 4.1 per cent rally to $76 pulled up other large-cap blue chips, including Hutchison, which rose 3.29 per cent to $125.50. SmarTone Telecommunications (Stock Split, Page 16) continued to soar, gaining 10.09 per cent to $34.90, as investors attached a higher valuation to it as rival cellular telephone operator Sunday's initial public offering reportedly received a strong response from investors. SmarTone had been in the 'doldrums', Mr Gorges said. 'Perhaps the Sunday thing gave it a bit of a kick,' he said. The counter has risen 17.5 per cent in the past two trading days and details of Sunday's offering will be announced tomorrow. The four telecommunications-related stocks - China Telecom, HKT, Hutchison and SmarTone - pushed the Hang Seng Index up the equivalent of 344.51 points, accounting for most of yesterday's gains in the index. Red chips also benefited from investors eager for exposure to the mainland's telecommunications and technology market, sending the red-chip index 6.17 per cent higher to 1,502.53 points. Legend jumped 9.95 per cent to $49.70 after the company announced a joint venture with CyberWorks to develop a broadband Internet network on the mainland. The counter - which has put on 40.79 per cent in the past two days - is also benefiting from buying ahead of its one-into-four stock split on March 8.