"We are courting each other," a government spokeswoman told Reuters, declining to say more. The possibility Disney might put its fifth Disneyland theme park in this special region of China has been a plus factor for Hong Kong shares since January, and speculation has increased ahead of Hong Kong's budget announcement on Wednesday.

Financial Secretary Donald Tsang's speech could provide an ideal forum to unveil a deal to build a theme park, but a Disney spokesman said:

"We do not comment on rumours and speculation. At this point we consider all these reports and their contents as such."

Disney chairman and chief executive Michael Eisner sparked the speculation when he said in January it might be time for Mickey Mouse to head to China.

The Hong Kong media has pursued the issue tirelessly, saying repeatedly since January that an announcementwas imminent.

Local commentators argue that Hong Kong, which reverted to Chinese rule in 1997, is an ideal site for the fifth Disney theme park because of a potential 1.2 billion visitors from China.

Shares which might benefit from a Disney project have soared on talk Tsang would use the theme park deal to brighten a gloomy budget.

More than a year after falling into recession, there are few signs Hong Kong's economic plight is easing. The government said late last year gross domestic product was likely to contract around five percent in 1998.

Officials hope tourism could provide some uplift in 1999. Visitor arrivals in 1998 were down nine percent from 1997, but there were indications of a pick-up in the second half of last year.