China Rongsheng Heavy Industries Group Holdings Ltd rose in Hong Kong trading after saying it applied to withdraw a plan to buy a diesel engine maker for 2.15 billion yuan ($338 million) because of the European debt crisis.

The shares gained as much as 6.4 percent, headed for the biggest gain since Aug 7, after China's biggest privately owned shipmaker made the statement on Friday.

"If the withdrawal is successful, the investors will be happy and the cash pressure on Rongsheng will be relieved as there will be savings for Rongsheng," said UOB-Kay Hian Holdings Ltd analyst Lawrence Li.

China Rongsheng, which hasn't announced new shipbuilding contracts this year and is releasing interim results on Tuesday, said it expects a significant drop in its first-half profit. The stock advance on Monday pared Rongsheng's decline this year to 48 percent and the index gained 8.4 percent in the same period.

China Daily-Agencies