HK shares seen up, cyclicals to rise on growth optimism

HONG KONG: Hong Kong shares are expected to rise on Friday after better economic data from the US renewed optimism about global growth that will likely lift shares of cyclical sectors such as materials and resources.

Gains will be kept in check by caution, however, ahead of Saturday's inflation data from China. Inflation is expected to accelerate to 6.3 percent in June according to a Reuters poll of 28 economists.

Signs of an improving labour market as well as healthy retail sales data fed a rally on Thursday on Wall Street, where the S&P 500 rose 1.1 percent and the technology-heavy Nasdaq market posted its best eight-session stretch in two years.

On Thursday, the Hang Seng index closed up marginally higher, rising 0.1 percent to 22,530.2 as a bounce in banks following China's latest interest rate increase was just enough to offset weakness in property and energy counters.

Energy stocks, particularly oil majors, are expected to rebound on Friday after crude oil prices posted the biggest single-day percentage jump in two months overnight on hopes that an improving jobs environment in the US would underpin the economic recovery.

The rally in China's top oil producers Petrochina and CNOOC stalled this week along with the rest of the market as concerns over China's local government debt burden and weaker overseas markets prompted profit-taking.

Elsewhere in Asia, Japan's Nikkei was up 0.9 percent, almost recovering to levels seen before the mid-March earthquake and tsunami, while South Korea's KOSPI was trading down 0.1 percent as of 0030 GMT.

Copyright Reuters, 2011