Shenhua Energy led the day’s blue-chip gains, rising 6.9 percent to 36.35 Hong Kong dollars after Goldman Sachs added the company to its conviction buy list. The investment bank said higher oil prices could strengthen demand for coal.

Hong Kong stocks rose Monday, with gains in Chinese coal producers leading the way after Goldman Sachs upgraded the sector because of surging oil prices.

The Hang Seng Index rose 123.37 points, or 0.5 percent, to 25,742.23.

The benchmark could climb above 26,000 points later this week, thanks to Wall Street’s recent strength and the resilience of China’s markets following the earthquake in Sichuan province, said Ernie Hon, a strategist at ICEA Securities.

“External sentiment will continue to support the local market,” Hon said.

After topping US$127 last week on the New York Mercantile Exchange, oil prices dropped below US$126 a barrel Monday in electronic trading.

“With oil price making new highs, we see coal entering a value territory,” Goldman said in its report.

Goldman also upgraded Yanzhou Coal and China Coal. Yanzhou Coal jumped 5.6 percent to HK$16.62; China Coal advanced 5.3 percent to HK$18.02.

Chinese commodities producers also gained as traders bet the resources sector could see greater demand due to reconstruction efforts after the earthquake.

China Molybdenum surged 13.5 percent to HK$10.16, Anhui Conch rose 4.7 percent to HK$73.40 and Jiangxi Copper gained 3.8 percent to HK$18.94.

Among local blue chips, property developers rose on reports of strong sales at several residential projects under development, analysts said.

Cheung Kong rose 1.6 percent to HK$130.50 and Sino Land increased 1.7 percent to HK$21.20.

Sun Hung Kai Properties, however, lost more ground amid a power struggle between the brothers who control the company. Its shares fell 1.1 percent to HK$132.40.