HONG Kong's benchmark stock index rose to its highest in more than three months as gains by oil and coal producers outweighed losses by refiners and airlines.

Cnooc Ltd, China's largest offshore oil driller, advanced after crude surpassed a record US$120 a barrel. China Petroleum & Chemical Corp, the country's largest refiner, and Cathay Pacific Airways Ltd fell on concern higher fuel costs will erode profit.

"Oil prices are going to hold up between US$100 and US$120 a barrel," said Tat Auyeung, a fund manager at Apex Capital Management in Hong Kong, which oversees almost US$800 million. "High oil prices are not good for airlines."

The Hang Seng Index added 78.18, or 0.3 percent, to 26,262.13 at the close in Hong Kong, the highest since January 14. The gauge fell as much as 0.4 percent earlier. The Hang Seng China Enterprises Index, which tracks so-called H shares of Chinese mainland companies, gained 0.2 percent to 14,651.29.

CNOOC, China's third-largest oil company, advanced 3 percent, to HK$13.90 (US$1.78). The price estimate was raised 10 percent to HK$16.50 at Goldman Sachs Group Inc.

Citic Resources Holdings Ltd, a unit of China's fourth-largest oil producer, jumped 6.6 percent, to HK$3.90, its biggest gain since April 22.

China Petroleum, also known as Sinopec, dropped 2.2 percent to HK$8.52 on speculation profit will be squeezed by the rising cost of crude, Bloomberg News said.

Cathay Pacific, Hong Kong's largest carrier, declined 1.3 percent to HK$16.84 on concerns higher crude prices will increase its fuel costs.