Chinese stocks rally in New York

Chinese equities traded in New York rose the most in a month after regulators approved funds tracking Hong Kong shares and European leaders agreed on steps to ease the region's sovereign debt crisis.

The Bloomberg China-US Equity Index of the most-traded Chinese companies in New York advanced 2.9 percent to 91.21 on Friday, the most since May 29. Sohu.com Inc, owner of the third-biggest search engine in China, jumped the most in three months, leading gains in Internet companies. Semiconductor Manufacturing International Corp surged 7.9 percent, the most since November, while LDK Solar Co, the world's second-largest maker of solar wafers, climbed for the first time in six days.

Leaders of the 17 euro countries dropped requirements that taxpayers get preferred creditor status on aid to Spain's banks and opened the way to recapitalize lenders directly. China sends about 20 percent of its overseas sales to the European Union, according to data compiled by the World Trade Organization. China's securities regulator on Friday approved the first two exchange-traded funds on the Shanghai and Shenzhen bourses to track Hong Kong stock indexes.

The EU's decision "reduced the risks of global banks failing, which is a positive for everything", Kevin Shacknofsky, who helps manage about $5 billion for Alpine Mutual Funds in Purchase, New York, said on Friday. "The new measures from China will increase investment flows across the border."

The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the United States, soared 3.6 percent to a one-month high of $33.67. The Shanghai Composite Index advanced 1.3 percent.

Bloomberg News