Hong Kong shares pared earlier gains to end slightly higher on the day as a bounce in banks following China's latest interest rate increase was just enough to offset weakness in property and energy counters.
The Hang Seng Index closed up 0.06 percent at 22,530.18. The China Enterprises Index outperformed with a 0.33 percent gain as insurers gave it an additional boost.
On the mainland, the Shanghai Composite Index ended down 0.58 percent as developers were seen as the most affected by rising interest rates.
HIGHLIGHTS:
* Insurers had another strong day on expectations that as equity markets stabilise, higher interest rates lift investment incomes by widening the spread they earn on insurance products. Property and casualty insurers are expected to be bigger beneficiaries in the short term, reflected by the 4.6 percent bounce in shares of PICC Property & Casualty Co Ltd in strong volume. Outside of the Chinese insurers, AIA Group rose 1.7 percent and was the top boost for the Hang Seng Index.
* Chinese banks staged a mild rebound, although performance was mixed suggesting overhangs from local government debt in China are likely to keep investors at bay despite valuations being close to those at the depths of the financial crisis. Industrial & Commercial Bank of China Ltd ended the day up 0.2 percent, while Bank of Communications Corp closed up 1.2 percent. Agricultural Bank of China Ltd , expected by market players as the bank most exposed to potential bad loans, closed flat on the day. - Reuters