Hong Kong shares rose on Tuesday, snapping a four-day losing streak on a short squeeze in the Chinese property sector after several leading developers reported better sales in March.

Local media reported that contracted sales for Evergrande grew 1.4 times in March from February, helping further dissipate gloom in the sector after 2011 corporate earnings were not as bad as some had feared.

Embattled Hong Kong property giant Sun Hung Kai Properties produced its first rise in five days, with gains accelerating after the company announced the owners would make their first public appearance later in the day.

The Hang Seng gained 1.3 percent, while the China Enterprises Index of the top mainland listings in Hong Kong jumped 1.8 percent. Market turnover on Tuesday was relatively weak, but increased 40 percent from Monday.

Chinese internet giant Tencent Holdings was among the Hang Seng Index's top boosts, gaining 2.9 percent after Goldman Sachs became the latest brokerage to upgrade the stock from neutral to buy.

Mainland Chinese markets are shut for a three-day holiday and will resume trading on Thursday, while markets in Hong Kong will be shut on Wednesday and Friday. Traders said overall bourse turnover was likely crimped as a result.

Positive March contract sales numbers are a short-term positive for the stock prices of Chinese developers because it means their cash flows were better, said Alan Lam, Julius Baer's Greater China equity analyst.

But I will look at whether this trend continues into April and May because there's a seasonality factor in these March numbers as well. I would be a little more cautious about buying into the sector now, he added.

Part of Lam's caution can be attributed to strong gains in the sector after a hammering in 2011. Unlike other growth-sensitive sectors that shed steep 2012 gains in March as the earnings season commenced, most Chinese developers have largely held onto their rally-leading gains.

Evergrande, China's fifth-largest developer by sales according to the China Real Estate Information Corp (CRIC), on Tuesday surged 7.5 percent in almost double its 30-day average, bringing its gains this year to 42 percent.

This compares with the 13 and 9.3 percent gains on the Hang Seng and China Enterprises indices, respectively, this year. In 2011, Evergrande lost 15 percent, while the two benchmarks lost 20 and 22 percent respectively.

Shares of Chinese railway companies extended gains after posting strong 2011 earnings over the weekend. China Rail Construction jumped 8.4 percent on Tuesday, bringing its gains this week to 18 percent.

PLEASANT RAILWAY SURPRISES

Chinese railway companies, along with their property developer peers, have been pleasant surprises during the 2011 corporate earnings reporting season, where Chinese companies have broadly disappointed.

The Chinese property sector impressed with its greater earnings resilience and growth momentum than expected. Monetary tightening since late 2009 has reined in speculation, but sent prices tumbling and sales plunging.

Developers' comfort under current tightening and confidence in a stable outlook suggests the toughest time for China's property sector is over, Citi property analysts led by Oscar Choi said in a note last week.

Most developers have adopted a more realistic mindset and clear development strategy without counting on policy, reflected in their conservative sales targets and construction plans in 2012, Citi analysts added.

They advised clients to add beta names in the first half of this year such as Evergrande with policy loosening a likely catalyst in March and April, with China Overseas Land seen as a long-term winners in the sector.

High beta shares provide returns that tend to be bigger than the market average.

Sun Hung Kai's 2 percent gain on Tuesday recovered about one-fifth of the $5.5 billion it lost in market value after news of the arrest of its co-chairmen by Hong Kong's corruption watchdog last week.