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Hong Kong Stocks Gain on U.S. Optimism, China Mobile Deal

Hong Kong stocks rose the most in three weeks as faster-than-estimated U.S. growth boosted confidence in the economic recovery. China Mobile Ltd. gained after striking a deal to sell Apple Inc.’s iPhone.

The Hang Seng Index (HSI) added 0.5 percent to 22,925.39 as of 9:31 a.m. in Hong Kong, poised for the biggest advance since Dec. 2. The Hang Seng China Enterprises Index (HSCEI), also known as the H-share index, climbed 0.6 percent to 10,668.92.

Futures on the S&P 500 added 0.3 percent today. The equity gauge climbed 0.5 percent on Dec. 20, capping its biggest weekly gain since October, after U.S. data last week showed gross domestic product climbed at a 4.1 percent annualized rate, the strongest since the final three months of 2011 and up from a previous estimate of 3.6 percent.

The International Monetary Fund is raising its outlook for the U.S. economy as a budget deal in Washington and the Federal Reserve’s plan to taper bond buying ease doubts about the future, IMF Managing Director Christine Lagarde said on on NBC’s “Meet the Press” yesterday.

The Hang Seng Index climbed 15 percent from its June low through last week on signs China’s economy is stabilizing. The measure traded at 10.86 times estimated earnings on Dec. 20, compared with 16.42 for the Standard & Poor’s 500 Index. The H-share index climbed 20 percent from this year’s low on June 25.

Funding Crunch

The Hang Seng China Enterprises Index last week erased all gains since China announced details of reform measures on Nov. 15 amid concern about the nation’s rising borrowing costs. Two of China’s three biggest securities firms predict the central bank will refrain from using open-market operations to inject funds this week as policy makers seek to rein in debt and contain inflation.

The seven-day repurchase rate, a gauge of liquidity in the financial system, jumped 100 basis points on Dec. 20 to 7.60 percent in Shanghai, according to the National Interbank Funding Center. That’s the highest level since June’s funding squeeze drove the rate to a record 10.77 percent.

China may raise the benchmark deposit and lending interest rates in the first-half if inflation growth is above 4 percent, Shanghai Securities News reported, citing Wang Guogang, head of the Institute of Finance and Banking under the Chinese Academy of Social Sciences.

China Mobile today climbed 1.5 percent to HK$81.10. The carrier will sell the Apple’s iPhone 5s and 5c models in its retail stores starting Jan. 17, the companies said. The deal will allow both to boost declining market share in the world’s biggest wireless market.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

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