Apr. 14, 2008 (China Knowledge) - Hong Kong stocks rallied on Friday, hitting two-month high, powered by the banking shares as they expected rosy profit in the first quarter of this year.

Hang Seng Index, the benchmark, opened slightly higher at 24,442.27 points in the morning session. After fluctuating between 24,322.11 and 24,681.46 points, the blue-chip Hang Seng Index closed 480.69 points, or 1.99% higher to 24,667.79. Mainboard turnover rose to HK$77.14 billion (US$9.9 billion), compared with HK$74.81 billion on Thursday.

Hang Seng China Enterprise Index, which tracks the overall performance of 43 Chinese mainland state-owned enterprises on Hong Kong Stock Exchange, shot up 358.91 points or 2.76% to 13,357.12 points.

Chinese banks advanced after they expected robust first-quarter earning growth due to higher interest on consumer lending as Beijing grants lenders more flexibility in pricing loans. The Industrial and Commercial Bank of China<601398><1398>, the largest lender in the country, was the day's most active player. Its shares jumped 2.84% to HK$6.15. Bank of Communications<601328><3328> stormed 5% to HK$10.52. China Construction Bank <601939><939>, the third-largest bank by market value, rose nearly 2.8% to HK$6.71 as investors bet it will post handsome 2007 results after the market close. China Merchants Bank<600036><3968>, ended 4.6% higher to HK$29.85 after it estimated that net profit surged at least 140% in the first quarter of this year.

Another bright spot China Coal Energy<601898><1898>, surged more than 5% to HK$15.94 after China's second-largest coal producer said it planned to sell more coal on domestic spot market this year, which should add margins.

CNOOC Ltd<883><CEO>, the nation's largest offshore oil producer by output, vaulted 4.56% to HK$12.82, and PetroChina<601857><857><PTR>, leapt nearly 3% to HK$10.36 after they signed landmark deals to buy liquefied natural gas from top LNG exporter Qatar.

But Kingdee International Software Group Ltd<268>, China's second-largest software designer, was in turbulent waters after the company and its chairman sold up US$21.5 million worth of shares. Its shares tumbled 11% to close at HK$6.84.