Asian markets finished mixed Thursday with stocks in mainland China rebounding from early losses of more than 6.5%, and shares in Hong Kong plunged on concerns of China's economic tightening policy measures.

China's Shanghai Composite Index finished higher by 42.45 points, or 1.1%, at 3,804.05, and Hong Kong's Hang Seng Index fell sharply by 758.72 points, or 3.5%, at 21,082.22.

The sharp reversal in China came after speculation made the rounds that the government might repeal or reduce the stamp duty to help prop up their lagging equity markets. Government officials haven't confirmed or denied the rumors.

Market players in Hong Kong are growing increasingly concerned that the government will raise interest rates after hiking the reserve requirements for banks to 15.5% earlier this week. "Of course there's the old list of concerns including the credit markets and China's tightening, which continue to discourage investors to hunt for more bargains despite the market's oversold condition," said Peter Lai, investment manager at DBS Vickers.

Chinese major oil and natural gas company PetroChina ( PTR) reported a 2.4% rise in 2007 net profit to 145.63 billion yuan, missing Wall Street estimates of 152.1 billion yuan. Earnings per share came in at 0.81 yuan, vs. 0.79 yuan for the prior year. ADR shares of PetroChina, which trade on the NYSE, rose slightly by 1.5% to $122.55.

"The market should realize that under the current tax and regulatory regime, a higher crude oil price implies lower profit for PetroChina," said Thomas HM Wong and Jimmy Wong, analysts with UBS Investment Research.

Elsewhere in the energy sector, Cnooc ( CEO) lost 3.9% to $134.75, China Petroleum & Chemical ( SNP) fell 1.5% to $83.09, and Sinopec Shanghai Petrochemical ( SHI) traded off by 0.2% to $32.99.

Crude oil prices continued to cool off Thursday helping shares in the Chinese airline sector. China Eastern Airlines ( CEA) moved up 13.5% to $51.36, and China Southern Airlines ( ZNH) advanced 9% to $38.50.

Chinese fabless semiconductor company Vimicro International ( VIMC) reaffirmed its fourth-quarter 2007 revenue guidance of $24 million to $27 million, vs. Wall Street estimates of $25.61 million. Vimicro wasn't as bullish for its first-quarter 2008 revenue guidance. The company expects to earn first-quarter revenue of $15 million to $16 million, vs. Wall Street estimates of $22.72 million. Vimicro said it's cautious on first-quarter guidance because of concerns over the global economic slowdown. ADR shares of Vimicro, which trade on the Nasdaq, closed up 5.4% at $2.69.

Xin Zhou, the CEO and chairman of leading Chinese real estate company E-House ( EJ) said he plans to buy up to $10 million worth of shares in E-House's American depositary shares on the open market in the next six months. Zhou said the current share price is undervalued and not reflecting the firm's growth prospects. ADR shares of E-House finished 3% higher at $11.10.

Longtop Financial Technologies ( LFT), a software developer and IT service provider to the financial sector, ripped higher by 17% after the company said it closed a deal to provide data integration services to China AMC, one of China's largest asset management firms. ADR shares of Longtop Financial closed up $2.61 at $17.65.

Chinese biotechnology company 3SBio ( SSRX) received some bullish news from analyst Lewis Fan of Brean Murray. In a research note to clients, Fan reiterated his buy rating and raised his price target from $12 to $13. Fan also raised his EPS estimates for 2009 from 74 cents to 79 cents. 3SBio said Wednesday it plans to buy back up to $20 million of its ADR shares. ADR shares of 3SBio jumped on the news, advancing 13% to $8.65.

Leading the losers list among the Chinese ADRs were Uranium Participation ( U), down 5% to $9.86; Baidu.com ( BIDU), dropping 12% to $207.90; China Medical Tech ( CMED), losing 4% to $37.16; and Trina Solar ( TSL), finishing lower by 3% at $28.15.

Elsewhere in the Far East, Indian bond, currency and stocks markets were closed Thursday and will be closed Friday for local holidays.

Be sure to check out the Far East Portfolio at Stockpickr.com every night to find out which stocks in India and China are making big moves and announcing major news.

For more on Asia, check out Daniel Harrison's coverage at TheStreet.com.
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