Hong Kong shares higher midmorning on bargain-hunting

Hong Kong shares were higher Friday as bargain-hunters emerged from the sidelines to pick up stocks hit hard by recent selloffs.

But trading remained cautious ahead of the release later tonight of US December employment figures, a key gauge of the US economy.

The Hang Seng index was up 302.49 points or 1.1 percent at 27,189.77, off a low of 26,994.85 and a high of 27,224.99.

Turnover stood at 25.7 billion Hong Kong dollars.

"Investors are picking up oversold stocks, helping the market recover," said Conita Hung research head at Delta Asia Securities.

"But there are a lot of uncertainties still out there - volatility in the US market for instance and rising crude prices - so trading sentiment should stay cautious this afternoon and for most of next week," she said.

Crude oil briefly hit the 100 US dollar a barrel level Wednesday night for the first time on the New York Mercantile Exchange and on Thursday, the price set a fresh trading record of 100.09 dollars a barrel after US government figures showed a larger-than-expected decline in crude oil inventories.

Resources stocks were in focus with oil stocks recovering from yesterday's fall, and mining stocks extending their strong run after gold prices rose.

Petrochina Co Ltd, Asia's largest oil company, gained 22 Hong Kong cents or 1.8 percent to 13.42 dollars and the mainland's biggest offshore oil producer, CNOOC Ltd, rose 42 cents or 3.2 percent to 13.54 dollars. China Petroleum and Chemical Corp or Sinopec added 16 cents or 1.4 percent to 11.26 dollars.

Mining stocks including Zijin Mining Group jumped 58 cents or 4.6 percent to 13.12 dollar and peer Lingbao Gold was up 64 cents or 12.9 percent at 5.62 dollars. Jiangxi Copper rose 94 cents or 5.1 percent to 19.26 dollars.

Most oil-sensitive stocks including airlines and power utilities were trading higher in line with the broader market.

Cathay Pacific Airways, Hong Kong's largest carrier, was up 16 cents or 0.8 percent at 19.86 dollars, while China Southern Airlines lost 22 cents or 2.2 percent to 9.84 dollars.

China Eastern Airlines gained 20 cents or 2.8 percent at 7.36 dollars after Air China's parent, China National Aviation Corp (CNAC), confirmed it will oppose Singapore Airlines and Temasek Holdings' bid to buy a stake in China Eastern. CNAC holds 12 percent of China Eastern.

"We still expect that the (share) subscription resolutions will be improved in accordance with the suggestion made in our last clarification announcement, and we will not accept the subscription resolutions if they are not improved as expected," CNAC said in a statement issued last night.

It said it will put forward its own proposal if the Singapore firms' deal is not approved at a special meeting of CEA shareholders on Tuesday.

Air China gained 28 cents or 2.6 percent to 10.92 dollars.

Chinese financials gained after reports a Hong Kong-based subsidiary of China's State Administration of Foreign Exchange (SAFE), manager of the world's largest foreign exchange reserves, has bought stakes in three of Australia's largest banks.

China's largest bank, Industrial and Commercial Bank of China, gained 16 cents or 3.1 percent to 5.38 dollars and Bank of China, the mainland's No 2 bank, was up 2 cents or 0.6 percent at 3.68 dollars. China Construction Bank gained 9 cents or 1.5 percent to 6.24 dollars.

SAFE Investment Company has bought stakes of less than 1 percent in each of the Australian banks - Australia & New Zealand Banking Group, Commonwealth Bank and National Australia Bank - London's Financial Times reported Friday, citing unnamed sources from the banks.

Each stake was worth about 200 million Australian dollars, it said.

The investments were made in the past two months and built up over several weeks so as not to move the banks' share prices or trigger mandatory disclosure requirements, the newspaper said, citing an internal report by one of the banks.

HSBC Holdings was up 40 cents or 0.3 percent at 129.90 dollars and unit Hang Seng Bank gained 80 cents or 0.5 percent to 156.30 dollars.

Property stocks were also higher with Cheung Kong (Holdings) up 1.20 dollars or 0.9 percent at 143.20 dollars and Sun Hung Kai Properties up 1.50 dollars or 0.9 percent at 162.90 dollars.

(1 US dollar = 7.80 Hong Kong dollars)