Hong Kong shares climbed 2.7 percent to a five-week high yesterday, as lower oil prices eased concern over the impact of high energy costs on businesses and consumers, while China Eastern Airlines surged the most in nine months amid talk of a possible merger.
Airline stocks soared on the prospects of cheaper jet fuel and speculation of consolidation in the aviation industry. China Eastern Airlines shot up 11.8 percent and Shanghai Airlines jumped 4.1 percent after Caijing magazine reported China's central government and Shanghai's city government were discussing the possibility of merging the carriers.
The mainland flag carrier Air China jumped 5.6 percent, while Cathay Pacific Airways climbed 6.3 percent. China's biggest airline by fleet size, China Southern, surged 9.9 percent.
The Hang Seng Index closed up 607.07 points at 23,134.55.
Mainboard turnover rose to HK$75.8 billion (US$9.7 billion), up from HK$51.9 billion yesterday.
Bourse operator Hong Kong Exchanges & Clearing (HKEx) gained 3.8 percent, with buying spurred by renewed confidence in global markets.
Financials led the gains as HSBC Holdings continued its upward march, rising 3 percent after analysts declared the stock a safe haven in the troubled financial sector and said the potential decline in its first-half profits was largely reflected in its share price. HSBC has been the most shorted stock on the exchange in recent months.
The China Enterprises Index of top locally listed Chinese firms rose 3.3 percent.
