Shares in China and Hong Kong rose on Wednesday in relatively healthy turnover as investors scooped up companies most likely to benefit from a global economic recovery. China's key stock index closed up 1.8 percent, supported by a report that showed consumer inflation eased in December from a recent peak in November, traders said.
While the figure was not a surprise since December CPI for last year was high compared with 2009, some investors took signs of easing inflation as cue to hunt for bargains after the market's steep falls earlier this week. China is scheduled to publish the numbers at 0200 GMT on Thursday. The rising mainland market lifted Hong Kong's Hang Seng index 1.1 percent, with cyclical shares such as shippers and metal producers, whose profits are closely linked with rising economic activity, outperforming the broader market.
Still, investors encouraged by broadly positive US earnings and economic data have continued to put money into North Asian markets which were significantly outpaced in 2010 by their smaller southern peers such as Indonesia and Thailand. Heavy buying was seen in PetroChina Co Ltd, up 1.7 percent on over twice its average daily 30-day volume, and Sinopec, which ended the day 4.4 percent higher.
A drop in the dollar to a two-month low lifted crude oil prices to near $92 per barrel.
China Mobile Ltd, a major laggard among the large caps in Hong Kong, rose 2.6 percent and provided the biggest boost to the Hang Seng Index on the day. The benchmark Shanghai Composite Index finished at 2,758.1 points and appeared to have found firm support at the crucial 2,700-point level after digesting the news of the latest official hike in bank reserve requirement ratios.
The index was up 1.1 percent by midday as traders reported cash flowing into the stock market from the weak bond market. China South Locomotive and Rolling Stock Corp and China North Locomotive, the country's top two train makers, both jumped by their 10 percent daily limit as the day's most actively traded stocks, and ranked among top gainers. Railways are among several sectors that Beijing is promoting. State media have reported that in 2011 alone, the country will invest 700 billion yuan ($106 billion) in building railways.