Hong Kong stocks gained 0.67 percent on Friday morning, crossing the 17,000 mark for the first time in 11 weeks, as China Mobile Ltd. rose sharply for the second consecutive day.

The benchmark Hang Seng index was up 113.14 points at 17,029.91 by midsession on turnover of HK$15.0 billion (US$1.9 billion), up slightly from Thursday morning's HK$14.7 billion.

Most analysts said China Mobile was bid up as a result of traders covering their short positions, although some said the stock was being used as a vehicle for yuan speculation.

"China Mobile is being used as a proxy for renminbi play," said Benny Yu, analyst at VC Brokerage. "It's a company that pays very stable dividend, almost like a utility."

China Mobile had risen 3.3 percent by midday to HK$50.90, just five cents off a 5-1/2-year peak set in morning trade.

But the morning's gains did not look convincing to everyone.

"The whole market was stronger than a lot of people were expecting," said Andrew Sullivan, head of sales trading at Daiwa Securities. "But you still need to see some fundamental driver; news-wise, we haven't seen anything fundamentally change."

Mainland insurers gained ground amid concerns that China would raise interest rates to curb rapid investment. Insurance companies are seen as beneficiaries of higher rates since these firms invest in interest-bearing vehicles such as domestic bonds.

Ping An Insurance (Group) Co. of China Ltd. jumped 3.6 percent to HK$26.25, earlier striking new highs.

China Life Insurance Co. Ltd. also set new peaks before easing to HK$13.18 for a 1.5 percent gain.

Among losers were mainland property plays, which faced selling pressure as investors bet on further tightening moves by China.

The country's economy is expected to grow 11 percent year-on-year in the third quarter, government think tank the State Information Centre said on Friday.

Shanghai-focused Shimao Property Holdings Ltd. dropped 2 percent to HK$6.46. Agile Property Holdings Ltd., based in booming southern China, shed 2.7 percent to HK$4.62.