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HK shares and HSBC notch up stunning gains

HONG Kong shares soared 7.4 percent to a three-month high yesterday, with HSBC notching up its biggest daily advance in five months, joining a global bank rally spurred by encouraging United States data and an expected easing of accounting rules.

Shares in bourse operator Hong Kong Exchanges & Clearing rose 10.5 percent, on higher turnover in the market in recent sessions. Daily turnover topped HK$50 billion (US$6.45 billion) through most of last week.

Daily average turnover is a key indicator of the exchange's trading fees which make up nearly a fifth of its revenues.

The benchmark Hang Seng Index ended 1,002.43 points higher at 14,521.97 in its biggest single-day percentage gain in four months. Turnover jumped to a three-month high of HK$75.2 billion from Wednesday's HK$52.8 billion.

"We've seen a fair mix of short covering and genuine buying. Anybody who shorted the market in the last two months would have been compelled to cover their positions now," said Andrew Sullivan, a sales trader with MainFirst Securities. "On the other hand, fund managers who held off on buying so far are also getting involved." HSBC rallied 15.3 percent to HK$49.40, after touching HK$49.70 earlier - its highest level since it announced its cash call a month ago, as the technical overhang related to its massive US$18 billion rights issue subsided.

Wednesday was the last day of trading of the bank's nil-paid rights in London.

China Petroleum and Chemical Corp rallied 6.2 percent to HK$5.47 after Goldman Sachs raised its rating on the stock to "buy" from "neutral" as it sees financials of Chinese oil companies improving further.

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