All of Asia's markets rallied to an upbeat close on Friday, ahead of next week's Christmas holiday celebrations, with Hong Kong winning back its steep losses for the week.

The Hang Seng leapt 609 points, or 2.26%, to 27,626, as traders showed renewed faith in financials and property stocks like Hang Seng Bank ( HSNGY) and Cheung Kong ( CHEUY) ahead of 2008. In China, the Shanghai Composite Index rose 58 points, or 1.15%, to 5101, and in Japan, the Nikkei jumped 225 points, or 1.5%, to 15,257, driven up by momentum in tech and exporters.

"Given the very strong performance this year there was progressively more and more caution in the last few weeks, and the recent selloff is still very manageable," says Tahnoon Pasha, head of Asian equities at MFC Global Investment Management in Hong Kong. "It does set a backdrop for positive returns in 2008."

Trading momentum was driven by reported rumors that Merrill Lynch ( MER) may get as much as $5 billion in cash from Singaporean fund Temasek. The deal follows this week's news that Morgan Stanley ( MS) will receive $5 billion, for a 9.9% stake bought by state-owned China Investment Corp., and other similar foreign cash infusions at the end of this year for Citigroup ( C) and UBS ( UBS).

Hong Kong financials climbed on the news, with HSBC Holdings ( HBC) up 0.8%, at HK$132.20, Hang Seng Bank rising 3.9%, to HK$158.60, and Bank of China ( BACHF) finishing 0.3% higher, at HK$3.90.

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