Hong Kong shares close 1.64 percent higher

The benchmark Hang Seng Index jumped 330.68 points to 20,534.85 on turnover of HK$75.26 billion ($9.65 billion).

Despite the end-of-month rally the index still saw its worst August in 10 years -- losing 8.49 percent --as global markets were hammered by the US credit rating downgrade and ongoing fears over the eurozone.

Among blue chips, Hengan International rose 4.1 percent to HK$66.50, on expectations of stronger second-half earnings while CNOOC gained 3.5 percent to HK$15.90.

China Life rebounded 2.8 percent to HK$19.56, but for August it plummeted 24.8 percent.

Shanghai closed flat. The composite index, which covers both A and B shares, gained 0.75 points to end at 2,567.34 on turnover of 62.2 billion yuan ($9.7 billion).

Dealers are looking ahead to key manufacturing data out on Thursday as well as inflation next week.

"The market is likely to be weak as the drop in the inflation rate in coming months is expected to be marginal," Zhang Xiang, an analyst with Guodu Securities, told Dow Jones Newswires.

He added Beijing might not ease its tight monetary stance as a result. The closely-watched consumer inflation growth figure hit a three-year high of 6.5 percent in July.

Banks led the gainers after China Merchants Bank said first-half net profit jumped 41 percent year on year.

It rose 0.5 percent to 11.85 yuan, while the Industrial and Commercial Bank of China ended up 1.0 percent to 4.14 yuan.

Steel makers fell after Baoshan Iron and Steel, the listed unit of the nation's second largest steel maker, posted a 36.9 percent drop in net profit for the first half of the year.

Baoshan ended down 0.8 percent at 5.29 yuan, while Hebei Iron and Steel lost 1.0 percent to 4.11 yuan.

Copyright AFP (Agence France-Presse), 2011