hk shares up 3.5 pct

HK shares up 3.5 pct; cheer China stimulus packageBy AFX | 10 Nov 2008 | 04:18 AM ET Text Size By Jun Ebias HONG KONG, Nov 10 (Reuters) -

Hong Kong shares rose 3.5 percent on Monday, as construction-related stocks cheered Beijing's plan to spend $586 billion on infrastructure and other key sectors to spur economic growth.

Cement maker China National Building Material Co. surged 42.3 percent and steelmaker Maanshan Iron and Steel Co. jumped 34.5 percent after the government announced the economic stimulus package at the weekend. "China-related counters continue to enjoy buying interest because of the stimulus package. Sentiment has improved dramatically," said Alex Tang, research head at Core-Pacific Yamaichi. "In the short term, the market will stay relatively firm and we are not expecting any sharp reversal." The benchmark Hang Seng Index closed up 501.20 points at 14,744.63, led by a 5.4 percent jump in China Mobile . The index gained as much as 6.2 percent earlier. Mainboard turnover rose to HK$60.7 billion ($7.8 billion) from HK$48.8 billion on Friday. Hong Kong-based consumer goods exporter Li & Fung Ltd. bucked the broad market trend to fall 5.8 percent. The company said at the weekend it had imposed a hiring freeze, would lay off some staff and reduce expenditure because of the global financial crisis. But resources and building-related shares racked up double-digit percentage gains, further boosted by China's cabinet announcing a shift to a "moderately easy" monetary policy.

Top integrated copper producer Jiangxi Copper surged 18.6 percent, China Railway Construction Corp. soared 20.2 percent, while China Railway Group, the nation's largest railway and highway builder, gained almost 18 percent.Port builder China Communications Construction jumped 22.5 percent.

Some shares trimmed earlier gains as investors feared China's package would not avert a looming global recession. "While the stimulus measures are good news for Chinese earnings and the domestic economy, it is not necessarily positive for the Asian region as a whole and for the United States," said Benjamin Collett, head of hedge fund sales trading at Daiwa Securities SMBC Co. "Investors are now sceptical about government fiscal stimulus measures after previous rescue packages failed. China's measures may have come a bit too late.

Expectations now are harder to change and manage than they were six months ago." Offshore oil producer CNOOC rose 9.2 percent, while Asia's largest oil and gas producer, PetroChina, gained 8.2 percent. Sinopec Corp., Asia's biggest refiner, jumped 7.7 percent. Shares of Lenovo, the world's No. 4 PC maker, slid nearly 13.5 percent to a 9-year low after Morgan Stanley cut it to underweight from equal weight, saying the global financial crisis posed greater challenges for the company given its gearing, margin dilution and higher fixed cost burden. The China Enterprises Index of top locally listed mainland companies rose 9.1 percent to 7,412.85, led by a nearly 9 percent jump in China Life Insurance. China Construction Bank rose 7.7 percent, while bigger rival ICBC gained almost 6 percent. Aluminum Corp of China surged 19 percent. The world's No. 3 alumina maker said on Sunday it would seek shareholders' approval for its plan to repurchase H shares in Hong Kong for up to 10 percent of the aggregate number of H shares in issue in the next 12 months.