Air China Ltd., the nation's largest international carrier, rose the most in two months in Hong Kong trading on optimism that Chinese carriers may able to add more flights to Taiwan.

The world's biggest carrier by market capitalization advanced 8.2 percent to HK$3.84 at the 12:30 p.m. break. China Southern Airlines Co., the nation's largest by total sales, gained 4.5 percent to HK$3.03.

China Eastern Airlines Corp., Hainan Airlines Co. and Shanghai Airlines Co., the other listed carriers that began flights to Taiwan on July 4, also surged on speculation that a 59-year-old restriction on flights to the island may be eased further. Chinese carriers are aiming to add more flights as they battle to cope with rising fuel costs and slowing demand.

"The market expects Chinese airlines to expand their flights to Taiwan,'' said Mao Ang, a Beijing-based China Galaxy Securities Co. analyst. "Adding more services will improve their business.''

Chinese airlines are able to operate 18 return flights a weeks to Taiwan under the current agreement. China and Taiwan are slated to hold talks after the Olympics in August to discuss increasing the frequencies, Tony Su, chairman of the Taipei Airlines Association, which represents Taiwanese carriers, said on July 4. Taiwanese airlines also fly 18 flights a week to China.

Shanghai Stock

Air China's Shanghai stock climbed by the 10 percent limit to 9.52 yuan. The company has reclaimed its position as the world's most valuable listed carrier. Singapore Airlines Ltd. took the spot for the first time in a year last week.

Air China had fallen 66 percent in Shanghai this year, up to July 4, on concerns that rising fuel prices and slowing travel demand may crimp profit. China Southern dropped 73 percent in the period, making it the worst performing CSI 300 Index company. Both carriers have also dropped about 70 percent in Hong Kong trading this year.

"Chinese airlines shares are very attractive'' following the sell-off, said Martin Wang, an analyst at Guotai Junan Securities Co. in Hong Kong. "They are relatively undervalued compared to other international carriers, but the growth potential is there for the next three to five years.''

China Eastern rose 8.7 percent to 7.28 yuan in Shanghai. Hainan Airlines gained 9 percent to 5.19 yuan. Shanghai Airlines climbed 8.7 percent to 6.11 yuan.