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Auto firms drive key index to end higher

SHANGHAI'S key stock index erased its morning loss and closed at more than 1 percent higher yesterday, led by auto makers, which stand to gain from government incentives to boost rural automobile sales.

The Shanghai Composite Index rose 1.15 percent, or 24.44 points, to end at 2,153.29 points. Gainers outnumbered losers 701 to 147 while 31 stocks were unchanged. Turnover shrank to 61.35 billion yuan (US$9.02 billion) from 71 billion yuan on Friday.

"Shares continued to fluctuate widely but the fluctuations are not as violent as on previous days," said Wu Kongyin, an analyst from United Securities Co. "Heavyweight (stocks) stabilized and shored up the index."

China International Capital Corp, however, believed the focus will turn back to corporate annual earnings, which may bear huge pressure on market sentiment. So far a total of 1,113 firms, which have released their financial figures for last year, reported a 41-percent drop in combined profit at 200 billion yuan.

Auto makers gained as they are set to benefit from government subsidies to encourage farmers to buy vehicles. SAIC Motor Co revved up 2.71 percent to 9.1 yuan. Dongfeng Automobile Co surged 3.09 percent to 4 yuan while Beiqi Foton Motor Co added 0.12 percent to 8.49 yuan.


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