Renewed optimism over the mainland's expected World Trade Organisation entry and traders scrambling to cover short positions triggered a 4.27 per cent surge in the Hang Seng Index yesterday. The blue-chip index rose 619.02 points to close at 15,111.94. On Thursday, Minister of Foreign Trade and Economic Co-operation Shi Guangsheng said that mainland negotiations with the European Union on WTO entry were in their 'final stages'. Tung Tai Securities associate director Kenny Tang Sing-hing said: 'There were rumours that the European Union is likely to have some movement that will likely reach a deal with China in the short term.' Despite the optimism, yesterday's rally was driven more by surprised investors covering short positions. OSK Securities research manager Alex Wong said: 'Once [the Hang Seng Index] broke above 14,750 it triggered a lot of short covering and that pushed the market higher.' Earlier in the week investors had taken large short positions on stocks such as China Telecom (HK) and Hutchison Whampoa. As the market started to rise investors closed off those positions, with Hutchison Whampoa jumping 6.76 per cent to HK$106.50 and China Telecom rising 6.45 per cent to HK$57.75. 'The short sellers really lost their shirts,' Fulbright Securities general manager Francis Lun said. Yesterday's trading was volatile, as the market dipped to a low of 14,288.33 points in the morning trading session before rallying in the afternoon. The scramble to cover short positions boosted turnover to HK$11.96 billion compared with HK$8.86 billion on Wednesday. The market had been expected to open higher after a strong performance on the United States markets on Thursday. 'In the morning trading session the market didn't follow expectations and moved higher,' Mr Tang said. Mainland-related counters were pushed up by the prospect of WTO entry in the near future. The H-share index for mainland companies listed in Hong Kong jumped 10.59 per cent, with the rise being driven by PetroChina, which rose on the back of expectations that rising oil prices will boost earnings. The oil giant jumped 18.89 per cent to close at HK$1.51 and it had the largest turnover of the day, at HK$1.52 billion. The red-chip index for locally incorporated arms with parents on the mainland also rallied, jumping 4.02 per cent. Hong Kong was the best performer in the region yesterday. Most Asian markets rose, on the back of easing interest rate concerns after the US reported on Thursday that retail sales fell 0.2 per cent last month - the first decline in 18 months. In Tokyo, the Nikkei-225 Index gained 2.81 per cent while Singapore's Straits Times Index rose 1.14 per cent. Core Pacific-Yamaichi International research director Alex Tang Yee-yuk said: 'We had an unexpected drop in the US retail sales figures and that triggered a buying spree throughout the markets in the region.' Brokers warned that the market still faced a lot of uncertainty, with the strong possibility of a 50 basis point increase in US interest rates when the Federal Open Market Committee meets on Tuesday. Celestial Asia Securities head of research Herbert Lau Chung-kwan said: 'We shouldn't be too bullish about the near-term performance.'