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Banks underpin stock market rebound

SHANGHAI'S key stock index rebounded and closed slightly higher led by strong performances from the banking sector.

The Shanghai Composite Index edged up 0.27 percent, or 5.92 points, to 2,206.57 points. Turnover was 131.7 billion yuan (US$19.25 billion). Gainers outnumbered losers 450 to 407 and 51 remained unchanged.

The Shenzhen Composite Index, which tracks the smaller domestic market, dipped 0.41 percent, or 3.04 points, to 734.88 points.

Banks recovered from the losses of the first half of the trading day. Industrial & Commercial Bank of China, the nation's biggest lender, edged up 0.27 percent to 3.71 yuan. Shanghai Pudong Development Bank advanced 4.02 percent to 17.09 yuan. Bank of China added 0.94 percent to 3.23 yuan and China Construction Bank increased 1.96 percent to 4.16 yaun.

Shenzhen Development Bank Co, the Chinese lender controlled by buyout firm TPG Inc, denied a media report saying it had been in talks to sell a stake to China Development Bank. The shares rose 1.07 percent to 15.15 yuan.

"The index may enter a period of adjustment till the end of the second quarter of this year and we suggest investors pay more attention to listed companies that are likely to get support from the government such as agricultural, machinery and construction companies," a research note by Guosen Securities said.

Automakers were among the gainers after China pledged to encourage consolidation in the industry in a bid to improve competitiveness. Media reports cited an unnamed source saying China may encourage Shanghai Automotive Industry Corp and China FAW Group Corp, the two biggest automakers, to buy rivals.

SAIC Motor Co, China's largest carmaker, edged up 0.79 percent to 8.90 yuan and FAW Car Co, the Chinese partner of Mazda Motor Corp, advanced 3.02 percent to 10.92 yuan.

Real estate developers remained weak. China Vanke Co, the country's largest publicly listed property developer, retreated 3.32 percent to 7.57 yuan. Poly Real Estate Group Co, China's second-largest developer by market value, dived 4.28 percent to 19.03 yuan. Cofco Property Group plummeted 4.95 percent to 6.34 yuan and Gemdale Corp, a Chinese partner of ING Group NV, lost 4.90 percent to 8.35 yuan.

China Life Insurance Co, the nation's biggest insurer sought to buy a 10 percent stake in Hong Kong's Wing Hang Bank Ltd from the Bank of New York Mellon Corp last year, Hong Kong's securities regulator said. The shares grew 1.34 percent to 21.20 yuan.

Ping An Insurance (Group) Co, China's second-largest insurer, added 3.13 percent to 33.28 yuan.

Pharmaceutical company Renhe Pharmacy Co said it will swap as many as 90 million shares valued at 615.7 million yuan (US$90 million) for two drug making units from its parent. The stock slid 5.45 percent to 11.80 yuan.


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