Hong Kong shares ended 0.12 percent higher Friday following a second straight rally on Wall Street as dealers cheered data showing the US economy growing faster than first thought.
The benchmark Hang Seng Index added 26.59 points to 21,731.37 on turnover of HK$50.48 billion ($6.51 billion).
However, heavily weighted bank shares dragged on the index, with a possible rise in bad loans this year overriding better-than-expected first-half results this week.
Bank of China fell 0.6 percent to HK$3.26 while China Merchants Bank slipped 0.9 percent to HK$13.44.
"Looking ahead we see concerns in funding costs pressure and weakening asset quality," Singapore brokerage UOB Kay Hian told Dow Jones Newswires, sticking with its Underweight rating on the China banking sector.
Port stocks rallied in heavy trading on local reports that several Chinese cities are attempting to establish free-trade zones in the wake of approval for Shanghai to do so.
Tianjin Port rose 2.6 percent to HK$1.17 -- a three-month high. Dalian Port gained 4 percent to HK$1.06.
Chinese shares closed flat. The benchmark Shanghai Composite Index edged up 1.15 points to 2,098.38 on turnover of 132.1 billion yuan ($21.6 billion).
The index was up nearly two percent over the week with Shanghai firms performing strongly on the free trade zone approval for the city last week.
"Investors started to take profits in shares of smaller firms while funds flew into free trade zone related-shares," Haitong Securities analyst Zhang Qi told AFP.
Shanghai International Port surged by its 10 percent daily limit to 4.52 yuan while Shanghai Jinqiao Export Processing Zone Development also jumped 10 percent to 14.16 yuan.
Oil firm Sinopec fell 0.45 percent to 4.41 yuan after its parent said it would pay $3.1 billion for a one-third stake in the Egyptian oil and gas business of US firm Apache Corp.