HONG KONG/SHANGHAI: Hong Kong stocks gained for the first session in four days on Friday, with investors scouting for bargains, but heavy selling in previous sessions saw the index fall 2.5 percent on the week.
Stocks ended flat in China. Gains in banking shares such as Shenzhen Development Bank, which advanced on strong earnings, offset by weakness in gold miners.
The benchmark Hang Seng Index closed up 1.8 percent at 23,012.37 in solid volume, after having fallen to near a five-month closing low on Thursday.
The China Enterprises Index of top locally listed mainland stocks rose 1.8 percent.
But caution over oil price volatility and continued turmoil in the Middle East will keep investors on edge, analysts said.
"I think the market had overreacted too much," said Peter Lai, director at DBS Vickers, but he cautioned that there were still uncertainties and variables in the market.
"It (trading) will be news driven and very sentiment oriented," he said.
Financials gave the biggest boost to the index, with HSBC up 2.2 percent.
Insurers got a lift after AIA, Asia's No. 3 insurer, beat forecasts with a 54 percent profit jump, prompting its shares to surge 5.7 percent.
China Life Insurance gained 1.1 percent.
"Fund managers at this moment are buying very conservatively," said Steve Cheng, associate director at Shenyin Wanguo in Hong Kong.
"Investors will go for something very boring but solid like China Mobile, which is good in cash flow but not good in terms of growth," he said.
Turnover was active in telecoms, such as China Mobile, whose shares were up 1.4 percent.
MINERS DRAG
China's benchmark index closed flat at 2,878.6 points, after a 0.3 percent rise on Thursday. It has fallen 0.7 percent this week.
Most analysts said the benchmark index was likely to move between 2,800-2,900 points in the near term and hover around the strong resistance level of the five-day moving average, now at 2,882 points.
"The upcoming earnings season may give investors some optimism," said Zhang Qi, analyst at Haitong Securities in Shanghai. "And some small caps, which are supported by policy, may lift the index."
Shenzhen Development Bank rose 2.2 percent after it said its net profit rose 25 percent in 2010 to hit 6.3 billion yuan ($958 million).
Analysts said investors were cautious on what kind of economic policy measures could be unveiled in China's annual parliament session, which starts on March 3.
Almost all the 16 banks listed on the Shanghai and Shenzhen markets were up, except for China Minsheng Bank as it halted trading. Two sources with direct knowledge of the matter said on Friday that it planned to sell more shares in Hong Kong and yuan-denominated convertible bonds.
Industrial Bank rose 0.9 percent, while Industrial and Commercial Bank of China (ICBC), one of the world's biggest banks by market value, was up 0.7 percent.
Gold miners remained weak after the global gold price was off a two-month low overnight. Sichuan Western Resources Holding dropped 3.6 percent, while Zijin Mining slid 2 percent.
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