Hong Kong shares ended higher on Friday, closing out the Chinese Year of the Rabbit at the highest level in 3-1/2 months in relatively healthy turnover amid hopes for more policy easing from Beijing and strength in overseas markets.

The Hang Seng Index finished up 0.84 percent at 20,110.37, closing above 20,000 points for the first time since Oct. 28 last year. On the week, the benchmark gained 4.7 percent.

The China Enterprises Index of top locally listed mainland companies closed up 0.08 percent, dragged by profit-taking in large-cap banks, which had enjoyed two weeks of gains.

On the mainland, the Shanghai Composite ended up 1 percent at 2,319.12, a six-week high, supported by optimism that the government would usher in market-boosting steps after next week's Lunar New Year holiday, during which markets in China will remain shut.

HIGHLIGHTS:

* Eased concerns over the cost of fundraising for European countries, and strong earnings from US banks helped HSBC Holdings Plc rise 3.7 percent to a 3-1/2 month high, the biggest boost on the Hang Seng Index. Europe-focused retailer Esprit Holdings Ltd rose 1.6 percent, while Prada SpA gained 4.6 percent.

* Weighing on the index, locally listed Chinese companies saw profit-taking after a strong week, and ahead of the long holiday next week, during which a slew of US companies are expected to release results and the Federal Reserve will announce its latest policy decision. Industrial & Commercial Bank of China Ltd, up 14 percent since last Monday, was down 1.1 percent. Ping An Insurance (Group) Co of China Ltd , up 21.8 percent over the same period, lost 0.8 percent.

* Outside of large-caps, Winsway Coking Coal Co Ltd took another hit, down 5.8 percent as it battles allegations of fraud.

Reports by Jonestown Research appeared on website InvestDoor (www.invest-door.com) and have been cited as causing the two-day plunge in Winsway shares, which have lost 13.3 percent since Wednesday's close. The company has dismissed the allegations. - Reuters