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Another good day for stock market

SHANGHAI'S key stock index closed higher yesterday on expectations that slowing growth in the consumer price index and falling producer price inflation would prompt looser macroeconomic policies.

The benchmark Shanghai Composite Index rose 1.8 percent, or 40.45 points, to close at 2,265.16 points. Turnover was 135.6 billion yuan (US$19.8 billion), down from Monday's 150.4 billion yuan. Gainers outnumbered losers 707 to 151, and 50 remained unchanged.

China's consumer price index in January was up 1 percent from the previous year, the slowest pace in 30 months, the National Bureau of Statistics said yesterday. The producer price index dropped 3.3 percent on a year-on-year basis, the fifth month it has fallen.

"It's very probable the Shanghai stock index will hit 2,300 points in the middle or long term, but a dip in the near future is inevitable after several days of rising values as investors will sell and grab their profits," said a research note by Shenyin & Wanguo Securities.

PetroChina Co Ltd, the biggest component of the index, rose 4.86 percent to 11.67 yuan. China Petroleum & Chemical Corp, Asia's largest refiner, advanced 3.25 percent to 8.89 yuan.

However, banks performed weakly after speculation interest rates would fall, which would hurt their profits. Bank of Communications fell 1.97 percent to 5.98 yuan. Shanghai Pudong Development Bank fell 0.22 percent to 17.75 yuan. Industrial and Commercial Bank of China dipped 0.51 percent to 3.91 yuan.


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