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Banking sector helps Shanghai index rise 1.7%

SHANGHAI'S key stock index closed higher yesterday, helped by strong performances by banks.

The Shanghai Composite Index was up 1.67 percent, or 45.79 points, closing at 2,789.55. Turnover was 108.6 billion yuan (US$16 billion).

"Although the index ended higher at the end of the trading day there were still fluctuations, which suggested the market is not yet stable. We think a period of adjustment is very likely in the future," GF Securities wrote in a research report.

Ping An Insurance (Group) Co announced on Friday it had reached an agreement with Shenzhen Development Bank Co to pay US$3.2 billion to the lender to become its biggest shareholder. Ping An will buy at least 370 million shares from the bank and will gain another 520 million corporate shares from an institutional investor. The two companies' shares resumed trading yesterday after a week-long suspension. Ping An Insurance rose 2.28 percent to 46.13 yuan in Shanghai while Shenzhen Development Bank surged the daily limit of 10 percent to 22 yuan in Shenzhen.

Other financial shares were also strong in the first half of trading. Industrial & Commercial Bank of China rose 5.33 percent to 4.94 yuan. Shanghai Pudong Development Bank advanced 4.85 percent to 21.42 yuan. China Construction Bank jumped 8.11 percent to 5.60 yuan. Bank of Communications was up 4.08 percent to 8.42 yuan.

China Shenhua Energy Co said power output declined 12.6 percent to 7.02 million megawatt-hours last month. The stock dipped 0.34 percent to 26.15 yuan.


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