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Positive Bounce Expected For Hong Kong Stock Market

The Hong Kong stock market headed right back to the upside again on Friday, one session after it had ended the three-day winning streak in which it had jumped almost 600 points or 2.9 percent. Now at a fresh six-month closing high, the Hang Seng Index finished just below the 21,500-point plateau, and now investors are anticipating the market to extend its gains when it opens on Monday.

The global forecast for the Asian markets is mixed to higher on optimism that European finance ministers will approve a new bailout package for Greece later in the day. Limiting the upside are rising tensions in the Middle East as Iran has discontinued the sale of oil to any British of French companies, in response to the latest round of EU sanctions - although the price of oil is climbing as a result. The European markets were mixed on Friday and the U.S. bourses were mixed, and the Asian markets are expected to split the difference.

The Hang Seng finished sharply higher on Friday following gains from the financial shares and the property stocks.

For the day, the index jumped 214.34 points or 1.01 percent to finish at 21,491.62 after trading between 21,381.69 and 21,546.73 on volume of 66.29 billion Hong Kong dollars.

Among the gainers, HSBC jumped 1.7 percent, while China Mobile added 0.4 percent, China Life spiked 3.5 percent, Cheung Kong climbed 1.6 percent, Sun Hung Kai Properties added 0.9 percent and New World Development collected 1.8 percent.

The lead from Wall Street is inconclusive as stocks turned in a relatively lackluster performance on Friday after showing a strong upward move in the previous session. Nonetheless, optimism that European finance ministers will approve a new bailout package for Greece on Monday helped to keep traders from doing much profit taking.

The markets largely shrugged off a report from the Labor Department showing that its consumer price index rose by 0.2 percent in January after coming in unchanged in the previous month. Economists had expected an increase of 0.3 percent. Excluding food and energy prices, the core consumer price index also rose by 0.2 percent in January after edging up by 0.1 percent in December - in line with economist estimates.

A separate report from the Conference Board showed that its index of leading economic indicators increased for the fourth consecutive month in January. The leading economic index rose by 0.4 percent in January following a revised 0.5 percent increase in December. Economists had been expecting the index to increase by 0.5 percent compared to the 0.4 percent increase originally reported for the previous month.

Among individual stocks, food maker H.J. Heinz (HNZ) rose by 4.6 percent after reporting stronger than expected third quarter earnings and narrowing its full year earnings outlook. Meanwhile, shares of Nordstrom (JWN) fell by 2 percent after the upscale department store operator reported better than expected fourth quarter earnings but forecast full year 2012 earnings below analyst estimates.

The major averages ended the session mixed, with the tech-heavy NASDAQ posting a loss of 8.07 points or 0.3 percent to finish at 2,951.78. The Dow climbed 45.79 points or 0.4 percent to 12,989.87 and the S&P 500 edged up 3.19 points or 0.2 percent to 1,361.23. The major averages all moved higher for the week. The Dow rose by 1.2 percent to its best closing level in well over three years, while the NASDAQ and the S&P 500 advanced 1.6 percent and 1.4 percent, respectively.

On the economic front, Hong Kong will on Monday announce CPI data for January, with analysts expecting the rate to come in at 5.8 percent, up from 5.7 percent in December.

Also, the People's Bank of China announced on Sunday that it will lower the reserve requirement ratio by 50 basis point to 20.5 percent for large commercial banks, underling its efforts to ease short-term credit crunch, effective Friday. The cut is the second time in three months. The move releases an estimated 400 billion yuan in capital into the market. The bank in December cut the reserve requirement ratio by 50 basis points for the first time in three years.

by RTT Staff Writer

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