By Grace Li
HONG KONG (Reuters) - Hong Kong scrapped travel sanctions against the Philippines on Wednesday after Manila issued an apology and offered greater compensation for the deaths of eight tourists during a hostage-taking and siege four years ago.
Hong Kong and the Philippines have close economic ties, with more than 150,000 Filipino domestic helpers working in the city.
Emotions remain raw over the 2010 deaths of eight Hong Kong citizens in Manila during a day-long siege after their tourist bus was seized by a sacked Filipino policeman.
After a standoff and negotiations, the gunman opened fire. Many Hong Kong residents watching the drama on live television accused Philippine authorities of botching the rescue operation.
Both sides had agreed to resolve the rift, Hong Kong's leader, Leung Chun-ying, told reporters after meeting Manila mayor and former President Joseph Estrada and an envoy of Philippine President Benigno Aquino.
The victims' families said they were satisfied with the Philippine government's apology, its offer of additional compensation, a pledge to punish officials who dealt with the crisis and a commitment to enhance tourist safety.
"The Philippine Government expresses its most sorrowful regret and profound sympathy, and extends its most sincere condolences for the pain and suffering of the victims and their families," the two governments said in a joint statement.
Leung said the agreement brought in a "new chapter" of normalized relations.
Aquino, quoted by his spokesman in Manila, expressed satisfaction that "a mutually satisfactory conclusion had been reached". Aquino had previously ruled out an apology, saying the act of a disturbed individual should not be attributed to a whole country.
The compensation amount was not disclosed, but media reports said it was around HK$20 million ($2.6 million).
In January, Hong Kong scrapped visa-free access for all Philippine diplomatic and official passport holders after Manila failed to issue a formal apology. Leung said this sanction would be lifted with immediate effect.
The former British territory reverted to Chinese rule in 1997, but retains a high degree of autonomy over its affairs.
The strain in ties coincided with a sharp deterioration in relations between Beijing and Manila over competing claims to potentially oil- and gas-rich waters in the South China Sea.
China had also urged the Philippine government to settle the dispute and to respect the lawful demands of victims' families.
($1=7.7527 Hong Kong Dollars)
(Additional reporting by Rosemarie Francisco in Manila; Editing by Ron Popeski)