Hong Kong shares rose for the first time in five days as commodity-linked stocks performed well, countering the post-earnings gloom in blue chips.

The Hang Seng Index (HSI) dived for nearly the whole day but rebounded an hour before the stock market closed. The index lost as much as 184 points led by Hong Kong Exchanges and Clearing (HKEx) and Li & Fung, which reported disappointing results on Wednesday.

HKEx, which reported a 6 percent decline in second-quarter earnings, fell as much as 5.65 percent hitting a day low of HK$97.65. JPMorgan downgraded the bourse operator to "neutral" from "overweight", and revised the price target of HK$200 for December 2008 to a June 2009 price target of HK$120.

Investors were also unloading shares in Li & Fung after it unveiled lower-than-expected first-half earnings, and Deutsche Bank cut its target price of the firm to HK$23.7 from HK$32.

The US-focused consumer goods exporter slumped nearly 10 percent before closing at HK$24.20, representing a 7.63 percent fall. Meanwhile, the HKEx pared some losses before closing, the stock recovered to close at HK$101, gave up only 2.42 percent.

HSI made a turnaround in the afternoon, closing 99.39 points, or 0.47% higher at 21,392.71, led by strong rallies in commodity stocks and reduced losses in the blue chips.

The consecutive losses since last Friday came to an end. Mainboard turnover fell to HK$61.1 billion from HK$69.3 billion on Wednesday.

Commodity stocks rallied after oil snapped its three-day losing streak and lifted other commodity prices on data showing decline in US fuel and crude inventories.

Offshore oil producer CNOOC surged 7.49 percent, leading the market's main gainers. China Shenhua Energy, the world's most valuable coal miner, was top of the heap among H-share advancers with a 6.42 percent rally.

Gold Miner Zijin Mining leapt 11.73 percent after hovering close to its one-year low since the beginning of August. Aluminum Corp of China surged 6.75 percent while Jiangxi Copper rebounded 6.68 percent.

The China Enterprises Index of top locally listed mainland firms rose 1.26 percent.

Dickie Wong, director at Friedmann Pacific Investment, said the derivative-related buys and sells by institutional investors should have caused fluctuation in the stock market yesterday.

Looking ahead, "the companies' results are still important," he said, "and we should keep an eye on the mainland stock markets after the Olympics." He expects the HSI to gain investors' support at the 21,000-point level.

(HK Edition 08/15/2008 page2)