Nov. 10 (Bloomberg) -- Hong Kong stocks rose for a third day, led by banks, after Credit Suisse Group raised its ratings on Industrial and Commercial Bank of China Ltd. and Bank of China Ltd.

ICBC, the world’s most profitable bank, gained 1.2 percent. Bank of China, the nation’s third-largest lender, added 1.1 percent. Credit Suisse lifted its recommendation on the shares to “outperform.” China Unicom (Hong Kong) Ltd., the country’s No. 2 wireless company, added 2.2 percent after Morgan Stanley upgraded the stock to “overweight.”

“The decks have been cleared for a yearend rally,” after the Group of 20 Nations pledged to maintain loose monetary policies, said Venkatraman Anantha-Nageswaran, global chief investment officer at Julius Baer & Co., which manages about $142 billion in assets. “The only driver has been central banks’ loose monetary policy and liquidity flooding into these markets. Certainly, one cannot defend any of these markets on valuation considerations.”

The Hang Seng Index advanced 0.3 percent to 22,268.16, adding to a two-day, 3.4 percent gain. It was the gauge’s highest close since Oct. 23. The Hang Seng China Enterprises Index, which tracks so-called H-shares, rose 0.4 percent to 13,367.19.

Hong Kong’s benchmark Hang Seng Index has risen 96 percent since a low for the year on March 9. Stocks on the gauge trade at 17.7 times estimated earnings, according to data compiled by Bloomberg.

Banks Upgraded

ICBC added 1.2 percent to HK$6.74. Bank of China rose 1.1 percent to HK$4.77. Credit Suisse upgraded the lenders’ shares to “outperform” from “neutral” due to lower-than-expected credit costs in their latest earnings reports.

Unicom advanced 2.2 percent to HK$11.10 after Morgan Stanley upgraded the stock to “overweight” from “equal- weight.”

China Strategic Holdings Ltd., a battery manufacturer, surged 78 percent to 66 Hong Kong cents after announcing the purchase of Nan Shan Life Insurance Co. with Primus Financial Holdings Ltd.

Raymond Or, former Hang Seng Bank Ltd. chief executive officer, will join China Strategic as vice chairman and CEO, helming Nan Shan, Sing Tao Daily News reported.

China Car, Home Sales

Dongfeng Motor Group Co., China’s third largest automaker, jumped 5.2 percent HK$11.64, adding to a two-day advance of 5.7 percent. The stock was the biggest gainer on the H-share index today. The company said on Nov. 6 that October vehicle sales rose 77 percent from a year earlier to 136,206.

Qingling Motors Co., a Chinese automaker that produces Isuzu trucks, rallied 32 percent to HK$2.35, its highest close since June 2001.

China yesterday reported passenger car sales of 8.19 million for the first 10 months of 2009, making the nation the leading auto market this year. Chinese home prices rose 3.9 percent in October from a year earlier, the most in 14 months, the statistics bureau said today.

China Resources Land Ltd., a state-controlled developer, gained 0.5 percent HK$19.02, after climbing as much as 3.9 percent. The stock is the most likely candidate to join the Hang Seng Index after Hang Seng Indexes Co. announces the results of its latest review on Nov. 13, Goldman Sachs Group Inc. and Nomura Holdings Inc. said. The stock has the highest combined ranking in market value and turnover of possible candidates for inclusion, according to reports from the brokerages.

Twenty-four stocks on the 42-member Hang Seng Index advanced while 16 dropped. November futures added 0.6 percent to 22,255.

To contact the reporters on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net; Jonathan Burgos in Singapore at jburgos4@bloomberg.net.

Last Updated: November 10, 2009 04:07 EST