CHINA Southern Airlines Co and Air China Ltd, the nation's two-largest carriers, rose in Hong Kong trading after Merrill Lynch & Co upgraded them to "buy" from "underperform." China Southern rose 3.4 percent to HK$3.04 (39 US cents).

Air China increased 2.3 percent to HK$4.05, the highest close in more than two weeks. The two carriers have hit "historically attractive levels" after declining more than 65 percent this year on falling passenger traffic and rising jet-fuel prices, Merrill said. They may now gain because of a potential recovery in demand, a possible industry restructuring and the impact of a rising yuan, they added.