Hong Kong shares bounced back after two days of losses on Wednesday as stronger overseas markets and a turnaround in the mainland bourses, led by the property sector, spurred some short-covering.
In Shanghai, shares of real estate developers rallied, partly on expectations that falling home prices will stimulate sales and also open the way for more policy easing. That helped push the benchmark stock index up 2 percent on the day.
The Hang Seng index ended the day up 1.1 percent, little changed from its midday close, and managed to recover losses from the past two sessions. The China Enterprises index of top locally listed mainland firms rose 1 percent.
HSBC Holdings rose 1.9 percent as worries about Spanish debt receded after Madrid sold a more-than-planned 3.2 billion euros ($4.21 billion) of 12- and 18-month bills on Tuesday due to good demand from domestic banks.
Early on Wednesday, data published by China's National Bureau of Statistics showed average new home prices fell last month from a year earlier, the first decline in two years, raising investors' hopes that policies in place to cool the property sector may soon be eased. Hopes that lower home prices would spur sales also helped sentiment towards the sector, the focus of the government's efforts to rein in prices.
The rate, currently at 3.5 percent, is down from a six-week peak of 4.2 percent on April 6.
In Hong Kong, where short-selling has remained above the average 8 percent level, some bearish bets were covered following the biggest gains on Wall Street in a month on Tuesday and a better-than-expected Spanish debt auction.
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