Hong Kong Stock Index Recovers

The blue-chip Hang Seng Index ended up 1.1 percent, or 311.04 points, at 27,771.21 after swinging 1,447.03 points throughout the session.

The benchmark index fell as much as 3.8 percent following overnight losses on Wall Street, where the Dow Jones industrial average fell 1.7 percent on worries about the U.S. housing and banking sectors amid rising defaults in subprime, or risky, mortgages.

But gains in Tokyo and in Shanghai helped boost investor confidence, though analysts said trading in Hong Kong will likely remain choppy in the near-term as lingering concerns over the outlook for the U.S. economy, a key export market.

"The U.S. subprime crisis is a particular concern, as any adverse development on that front will lead to recession in the U.S. and hence the global economy," Ernie Hon, a strategist at ICEA Securities, said.

Hon said the Hang Seng Index will find strong support at 25,000 given Hong Kong's solid macroeconomic fundamentals, highlighted by the continuous drop in the unemployment rate and strong gross domestic product growth.

Among the gainers Tuesday, China Netcom rose 11 percent to HK$23.50 after China's Ministry of Information Industry said Monday it will grant fixed-line operators licenses for mobile telecom services "at an early date," an indication that Beijing will speed up the restructuring of the telecom industry.

Blue-chip conglomerate China Resources Enterprise surged 6.4 percent to HK$29.85 after it reported a 21 percent rise in third-quarter net profit.

Bank of East Asia jumped 4.8 percent to HK$50.55 after Bank of China Hong Kong Monday acquired a 4.94 percent-stake in the local lender for HK$3.95 billion to diversify its investment portfolio.

Bank of China Hong Kong fell 2.8 percent to HK$19.18.

Turnover totaled HK$146.41 billion (US$18.82 billion; euro12.74 billion), up sharply from HK$103.96 billion Monday.

Stock Exchange of Hong Kong: