Hong Kong shares rally to near 21 month highs

Hong Kong shares were up today hovering near 21-month highs, with investors looking to make the most of the rally in the Chinese banking sector at the start of the last full week of trading before the Lunar New Year holiday.

According to data over the weekend, growth in China's increasingly important services sector was up for the fourth straight month in January, with the slim increase adding to evidence that the recovery in the world's second-largest economy remained a modest one.

The Hang Seng Index rose in the trading break up 0.5 per cent at 23,844.1 after testing highs since late April 2011 in early trade. The China Enterprises Index of the top Chinese listings in Hong Kong was up 0.2 per cent.

In the mainland, the CSI 300 of the top Shanghai and Shenzhen listings was up 0.4 per cent, even as the Shanghai Composite Index rose 0.6 per cent. The indexes have now bounced 31 and 24 per cent, respectively, from a 3 December low.

According to analysts, over the short term, strength in the A-share market was going to drive the Hong Kong market. They add most investors still remained very invested in the market, torn between wanting to take some profit because they sensed a short-term correction coming up and not wanting to miss the next leg up.

China's Shenhua Energy Co and Yanzhou Coal Mining Co led a gauge of energy stocks rally the most among industry groups in the CSI 300 Index.