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Hong Kong stocks regained their footing yesterday as investors sought haven in China plays and snapped up oversold blue chips.

The Hang Seng Index gained 250.25 points, or 2.68 per cent, to close at 9,558.15.

A number of brokers were encouraged by the blue-chip gains, given the more sluggish performance of New York on Tuesday.

In its second session since the terrorist attacks in the United States, the Dow Jones Industrial Average gave up early gains to end down 0.19 per cent and the Nasdaq Composite Index lost 1.54 per cent.

'[The Hang Seng Index] did quite well considering we didn't have much to go on overnight,' South China Online vice-chairman Howard Gorges said.

Turnover was fairly low at HK$6.49 billion, kept down by uncertainty over the US response to the attacks.

'A lot of people are content to sit the market out and await developments,' Mr Gorges said.

Strong gains were seen in heavyweights such as China Mobile, which rose 5.89 per cent to $23.35. The stock had been making gains earlier this week at the expense of rival China Unicom, although the latter jumped 7.89 per cent to $8.20 yesterday.

'One of the major boosts came from Europe [on Tuesday] where most telecom stocks rebounded,' Asia Financial Securities vice-president Ricky Tam Siu-hing said.

The broader China-related market had a strong day, with the H-share index soaring 5.85 per cent and the red-chip index gaining 4.96 per cent as investors looked to park their cash in the relative shelter offered by China's economy.

China's World Trade Organisation admission - which was agreed with its trading partners on Monday - was not thought to have had much overall impact.

'WTO is favourable but I don't think it is driving [stocks]. I think it is just that some of the China stocks got oversold recently,' Mr Gorges said. 'WTO would have certainly made more impact in better market conditions.'

Nonetheless, some brokers said the WTO agreement helped certain stocks yesterday such as computer manufacturer Legend, which surged 13.76 per cent to $3.10.

'China's WTO entry will increase usage of the [personal computer] so Legend will benefit from increased demand,' Mr Tam said.

Investors were also spurred by Legend's announcement of a $250 million joint venture with Taiwanese firm Gigabyte Technology which said they would utilise economies of scale to maintain profit margins.

The jump in China stocks could also be explained by rumours spreading in the market that some of yesterday's turnover was brought by the return of 'hot money' coming from the mainland, despite a crackdown by the authorities there.

Hongkong Exchanges and Clearing soared 12.42 per cent to $9.05 as one broker said investors were betting market turnover would improve, increasing the exchange's revenue.

'Usually turnover improves after a crash,' Mr Tam said.

The deterioration of the domestic economy meant investors continued to steer clear of the property stocks.

The notable exception was Cheung Kong, which rose 3.63 per cent to $57. However, New World Development's performance was typical of the sector, dropping 2.91 per cent to a decade-low $5.

Steve@scmp.com

Key Figures

Close: 9,558.15 (+ 250.25)

Turnover: $6.49 bln

Volume: 4.04 bln shares

Day's high: 9,560.94

Day's low: 9,377.56

Advanced: 355

Declined: 185

Unchanged: 467

September futures: 9,545 (+ 274)

October futures: 9,540 (+ 260)

Graphic: neww20gbz



China stocks favoured as players seek shelter from global economic storms