Hong Kong stocks rebounded more than 1 percent on Monday, ending a month of sharp losses on a high note, after stronger than expected US economic growth data.
The blue chip Hang Seng Index rose 1.2 percent, or 170.54 points, to 14,386.37. Volume was below recent averages with HK$16.6 billion (US $2.1 billion) traded.
China's top PC maker Lenovo Group was the top blue chip performer, surging 4.8 percent to HK$3.80 ahead of its first-half earnings due on Tuesday.
Dealers said shares such as Lenovo were starting to look attractive after recent losses but warned that overall sentiment remained cautious ahead of a US rate-setting meeting.
The US Federal Reserve is widely expected to raise interest rate by 25-basis-points on Tuesday after Asian markets close.
"There will not be any surprise factor on rates, but people will be watching to see how the US market reacts," said Louis Wong, research director at Phillip Securities.
Wong said the market might stabilise in the short term after a more than a 1,000-point drop in October. But he expects further weakness in the medium-term given lingering worries about interest rates and growing worries over bird flu.
Hong Kong stocks lost favour with international investors in October with a stronger dollar pulling investors toward US assets and signs of an economic renaissance IM Japan increasing investor appetite for Tokyo shares.
But one money manager said Hong Kong valuations still looked attractive. "There is no reason to think that a big crash is imminent unless something like a global epidemic flu hits Hong Kong and the rest of the regional markets," said Mark Mobiles, Managing Director at Templeton Asset Management Ltd.
Export stocks surged after a stronger-than-expected US third quarter economic growth figures from the United States soothed fears that two hurricanes and higher energy prices would curtail growth in the world's largest economy.
Trading firm Li & Fungi Co Ltd rose 2.16 percent to HK$16.55, while mini-motor maker Johnson Electric Holdings Ltd rose 1.45 percent to HK$7.
China shipping shares rebounded after recent heavy losses. Container leasing group and port operator COSCO Pacific surged 3.25 percent to HK$12.70 after recent heavy losses.
But China Construction Bank, which began trade last week in the world's largest IPO so far this year, continued to hover at its debut price of HK$2.35.
Dealers expect the stock to remain weak for several weeks given skittish global markets and after the firm priced its IPO near the top of an indicative range.
Jilin Chemical Industrial Co Ltd rose 12.37 percent to HK$2.72 after parent firm PetroChina Co Ltd said it would buy back the Hong Kong listed H-shares of Jilin Chemical, with plans to privatise the company.
PetroChina said it would buy back Jillian shares for HK$2.80 a share. China's top offshore oil producer, CNOOC Ltd, rose 2.5 percent to HK$5.05, ahead of a third-quarter revenue and operational data report out after the market close.
CNOOC said its third-quarter revenues rose 31 percent thanks to high-energy prices and rising output. TCL Multimedia Technology Holdings Ltd, the world's biggest TV maker, fell 5.74 percent to HK$1.15 after posting an unexpected third-quarter loss as the company continued to struggle to bring its global joint venture into line.
But China Eastern Airlines Co Ltd surged 6.9 percent to HK$1.08 after it posted a hefty jump in its third quarter net profit to 673.18 million yuan compared to the year ago period as passenger loads recovered.
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