Hong Kong stocks are set to end an otherwise gloomy week with the best day in three months, joining an Asian rally fuelled by the U.S. Senate passing a legislation that would avert a historic debt default, and increasing hopes that the Federal Reserve might pause raising interest rates. China stocks also climb.

** The Hang Seng Index surged 3.7% by the lunch break, on track for its biggest one-day gain since March 1. The gauge had touched six-month lows this week on China growth concerns and geopolitical tensions.

** China's blue-chip CSI300 Index rose 1.3%, while the Shanghai Composite Index rose 0.8%.

** Asian stocks surged on Friday after the U.S. Senate passed bipartisan legislation that lifts the government's $31.4 trillion debt ceiling. The measure now awaits President Joe Biden's signature before it can turn into law.

** Appetite for risky assets was also fuelled by bets the Federal Reserve might stand still on interest rates in its next meeting.

** Nuno Fernandes, equity portfolio manager at for GW&K's Emerging Wealth Equity Strategy, said he remains optimistic toward China's recovery, despite recent market volatility.

** "Chinese consumers are spending on wellness, on life experiences, on travel, on dining-out... so we're encouraged with the results. We are holding ground with our position," said Fernandes, whose holdings including Tencent Holdings Alibaba Group, Trip.com and Baidu.

** Tech shares listed in Hong Kong surged 4.9%.

** In China, northbound trading flow was on track to reach nearly 4-month high, at 8 billion yuan ($1.16 billion) in early Asia trades.

** Real estate and consumer discretionary stocks rebounded from early lows, up 3.3% and 2.5%, respectively.

($1 = 6.9121 yuan) (Reporting by Shanghai Newsroom; Editing by Shailesh Kuber)