HONG Kong stocks rallied yesterday, with the benchmark index rebounding from a three-year low, after governments worldwide agreed to support their banks, easing concern the global credit crisis will damp the city's growth.

HSBC Holdings Plc, Europe's biggest bank, climbed 4.3 percent after the United Kingdom agreed to invest US$63 billion in three banks. Hang Lung Properties Ltd, a Hong Kong-based developer, soared 20 percent, leading gains among developers as investors took advantage of recent declines to buy. Shares also gained after the city's government said it may use all of its foreign reserves to stabilize its financial markets.

The Hang Seng Index soared 1,515.29, or 10 percent, to close at 16,312.16, after the measure's 7.2-percent slump on Friday pushed it to close at the lowest level since November 17, 2005. The gauge, which had its sharpest jump yesterday since January 23, tumbled 16 percent last week, the most since January 1998, according to Bloomberg News. Of the index's 42 stocks, 23 rose more than 10 percent.

May use reserves

The Hang Seng China Enterprises Index, which tracks so-called H shares of Chinese companies, surged 13 percent to 8,083.43, its biggest advance since September 19. The Hang Seng Index has plunged 41 percent this year amid a rout that has wiped out about US$28 trillion in global market value and on concern frozen credit markets will trigger a global recession. Financial firms worldwide have reported almost US$600 billion in losses and writedowns from United States mortgage-related investments since the beginning of last year. World leaders are working to support financial systems to unlock credit markets and stop the rout in global stock markets.

Royal Bank of Scotland Group Plc, HBOS Plc, and Lloyds TSB Group will get an unprecedented 37-billion-pound (US$64 billion) bailout from the UK government.