A screen displays the final numbers for the Dow Jones Industrial Average on the floor of the New York Stock Exchange, August 10, 2011. Fear returned to Wall Street on Wednesday, sending the S&P 500 to another 4 percent decline, triggered by worries that Europe's debt crisis could engulf French banks and spill onto the US financial sector.[Photo/Agencies]

HONG KONG-- Hong Kong stocks staged a big rally on Wednesday. Analysts here said the market is likely to continue recovering as the Federal Reserves' pledge to keep the rates low may help investors somehow regain confidence.

However, where the market goes in the long run depends on the economic recovery in the United States and the Euro zone, analysts said.

The Hang Seng Index had plunged over 2,500 points since last Friday, once hitting the bottom of 18,868 points. Although the market rebounded to some ground on Wednesday, the recovery is "not enough".

Larry Jiang, the chief strategist of Guotai Junan International, told Xinhua that the sharp slump in the Hong Kong stock market together with the panic selling, are not "rational" as the city has "good" economic fundamentals.

Hong Kong shares reeled following the down trend of the global stock markets, in reaction to the downgrade of the US government debt by the Standard & Poor's (S&P) last Friday. Jiang said, the rating cut has intensified the fears over the economic outlook of the United States.

Jiang said Hong Kong stocks are now likely to rebound in the wake of the "irrational" plunge, especially after the Fed pledged to keep its benchmark rate close to zero at least through mid-2013, a move may help keep borrowing rates low and drive investors into riskier assets like stock.

Daniel Chan, the chief economist of BWC Capital Market, also said the market's recovery on Wednesday was largely due to Fed's decision, but the lack of strength showed the continued concerns from investors. "The outlook of Hong Kong's stock market is not optimistic".