Hong Kong shares rise on hopes China markets are slowly recovering
HONG KONG Aug 7 (Reuters) - Hong Kong shares rose on Friday on hopes that China's stock markets are stabilising after a 25-percent slide since mid-June, but gains were capped ahead of U.S. data which could prompt the Federal Reserve to start raising interest rates next month.
A U.S. rate hike as early as September could cloud the picture for further gains in Hong Kong's market even if markets in mainland China improve. Since Hong Kong's currency is linked to the U.S. dollar, its interest rates tend to follow.
The Hang Seng index rose 0.7 percent to close at 24,552.47 points, its highest close since July 31. It ended the week down 0.3 percent for the third consecutive week of decline.
The China Enterprises Index climbed 1.2 in its best day since July 13 to 11,227.94. It finished the week up 0.9 percent, ending a week in positive territory for the first time since June 12.
Close to 300 China funds that oversee more than 1 trillion yuan ($161 billion) are sitting on the sidelines with "ammunition" to enter the stock markets at any time, the Shanghai Securities News reported on Friday, in the latest attempt by state media to coax investors back into the market after the recent rout.
The Chinese government agency tasked with buying stocks to prop up the country's wobbling markets is seeking an additional 2 trillion yuan ($322 billion) in funds, according to a Bloomberg report.
But traders said it will take time before shaken investors return to the market, if they return at all in the near-term.
China Shenhua Energy led the rise in both the blue chip and Chinese enterprises indexes, rising 4.2 percent in its biggest daily gain since July 9.
Ping An Insurance and Tencent Holdings were the most active stocks.
Total trading volume of companies included in the HSI index was 1.1 billion shares. (Reporting by Donny Kwok; Editing by Kim COghill)
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