Hong Kong shares close 1.66% higher

Hong Kong stocks have climbed 1.66 per cent after Wall Street provided a strong lead on the back of better-than-expected earnings results.

The benchmark Hang Seng Index closed up 319.17 points at 19,559.05 on Thursday on turnover of HK$48.10 billion ($A6.01 billion).

Dealers took heart from the rally on Wall Street, where Yahoo!, Intel and Bank of America posted above-forecast earnings.

Adding to sentiment was the Federal Reserve's Beige Book report, which offered reassurance amid worries about a recent run of disappointing data, saying "overall economic activity continued to expand at a modest to moderate pace in June and early July".

Federal Reserve chairman Bernanke told congress on a second day of testimony that the central bank would act if warranted to boost growth.

His comments followed Tuesday's comments in which he warned second quarter growth in the world's biggest economy could come in lower than the first three months of the year.

The news lifted investor confidence on Wall Street.

The Dow climbed 0.81 per cent, the S&P 500 added 0.67 per cent and the Nasdaq advanced 1.12 per cent.

News reports out of China saying the country's four biggest state-owned banks ramped up lending in the first half of July, extending around 50 billion yuan in new loans, was seen as part of Beijing's efforts to boost the economy through investment.

Utility Power Assets, which kicked off Hong Kong blue chips interim reporting, rose 1.2 per cent to HK$60.00 after saying its first-half net profit rose 6.8 per cent from a year earlier.

China Unicom surged 5.4 per cent to HK$10.02 on bargain-hunting after it fell to a 52-week low of HK$9.45 on Wednesday.

China Coal jumped 4.2 per cent to HK$6.89 on expectations that coal prices will bottom out soon due to an expected recovery of the mainland economy.

Chinese shares closed up 0.73 per cent.

The Shanghai Composite Index gained 15.74 points to 2,184.84 on turnover of 68.4 billion yuan ($A10.36 billion).

"Investors have been juggling hopes for policy catalysts and worries over sliding corporate earnings. The loan report is helping hopes outweigh the concerns," TX Investment analyst Qiu Yanying told Dow Jones Newswires.

Insurers rose on hopes China will soon announce rules to broaden their investment options.

China Life Insurance jumped 5.60 per cent to 20.00 yuan while China Pacific Insurance rose 4.46 per cent to 23.64 yuan.

Infrastructure-related stocks gained on expectations for more government spending, with Pudong Road & Bridge Construction surging 6.68 per cent to 7.19 yuan while Shanghai Construction advanced 6.01 per cent to 6.88 yuan.

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