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Hong Kong stocks close 1.78% higher

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(Globalpost/GlobalPost)

Hong Kong shares rose 1.78 percent Friday after the US Federal Reserve moved to ease concerns over its stimulus programme, while China's central bank pledged to improve liquidity in the country's financial markets.

The benchmark Hang Seng Index added 363.21 points to end at 20,803.29 on turnover of HK$68.98 billion ($8.90 billion).

Hong Kong and Asia followed a rally on Wall Street after the Fed's New York president William Dudley said an end to the bond-buying scheme that started in September "is very likely to be a long way off".

He said the bank's policy deeply depends "on the progress we make towards our objectives" of pushing unemployment down to 6.5 percent and getting the economy back up to strength.

"This means that the policy -- including the pace of asset purchases -- depends on the outlook rather than the calendar."

"If labour market conditions and the economy's growth momentum were to be less favourable than in the (Fed policy committee's) outlook... I would expect that the asset purchases would continue at a higher pace for longer."

Shares in the Industrial & Commercial Bank of China (ICBC) in Hong Kong rose 2.7 percent to HK$4.89, Ping An Insurance gained 3 percent to HK$52.20, while coal producer China Shenhua fell 1.7 percent after a report it and other large Chinese coal producers had started selling coal at their lowest prices in five years.

Sentiment was given a further boost Friday when the governor of the People's Bank of China (PBoC), Zhou Xiaochuan, said it would "use all sorts of instruments and measures to adjust the overall liquidity level, so as to ensure the overall stability of the market".

He told a financial forum in Shanghai the bank would ensure the "normal operation" of the economy.

His comments come at the end of a week that saw global markets tumble on fears of a credit crunch in China that could affect the wider economy.

Chinese shares closed up 1.50 percent. The benchmark Shanghai Composite Index rose 29.20 points to 1,979.21 on turnover of 77.51 billion yuan ($12.50 billion).

Financial stocks rose across the board. China Merchants Bank jumped 6.23 percent to 11.60 yuan, ICBC rose 5.51 percent to 4.02 yuan and Shanghai Pudong Development Bank increased 5.08 percent to 8.28 yuan.

Property developers also rose on media reports the government might selectively ease measures aimed at controlling house prices.

Ningbo Fuda surged by its 10 percent daily limit to 4.27 yuan and Guangzhou Pearl River Industrial Development also jumped 10 percent to 11.42 yuan.

-- Dow Jones Newswires contributed to this report --

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http://www.globalpost.com/dispatch/news/afp/130628/hong-kong-stocks-close-178-higher