HK shares rise with China heavyweights

Analysts, though, stopped short of forecasting further gains given continued uncertainties over the health of the U.S. economy.

The Hang Seng Index rose 298.24 points, or 1.2 percent, to 24,831.36. The index is still down 11 percent since the start of the year.

Turnover fell to HK$74.28 billion from HK$85.51 billion on Friday, in a sign that overall sentiment remains weak, analysts said.

"If the broad market can maintain turnover of HK$80 billion or more for the rest of this month in an upward trajectory, then there will be a higher chance for the gains to become sustainable," said Castor Pang, strategist at SHK Financial.

Pang said Hong Kong's market tracked the movement of the Shanghai Composite Index, which reversed from early losses on talk of an easing of inflation in China. The benchmark Shanghai Composite Index closed 0.8 percent higher at 3,459.

Among those leading the blue-chip gains Monday was heavyweight China Mobile, which rose 2.5 percent to HK$117.60 after its recent sharp fall on fears of rising competition. The stock, which was the day's most heavily traded, contributed 76 points to the index's gain.

In a report published Monday, UBS said the recent slump in China Mobile's share prices was "driven by sentiment rather than fundamentals."

The investment bank said despite the government's intention to reorganize China's telecommunications sector it believes the government still wants China Mobile to lead the nation's 3G development and to grow the company into a global champion.

In the first concrete step in the restructuring process, mobile service provider China Unicom Ltd. is acquiring fixed-line China Netcom Group Corp. in a share swap valued at HK$439 billion (US$56.3 billion) based on Unicom's stock last traded price.