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October 10, 2009

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Confidence reigns as stocks lift

SHANGHAI'S key stock index rose by nearly 5 percent to close above 2,900 points on the first trading day after the eight-day holiday break yesterday.

It was the biggest daily gain in five weeks, largely supported by metal producers after commodities rose and investors' optimistic outlook for the Chinese economy.

The benchmark Shanghai Composite Index advanced 4.76 percent, or 131.20 points, to close at 2,910.62 points.

Turnover was 93.2 billion yuan (US$13.6 billion), with 876 gainers, 34 unchanged and no losers.

Total market value of A shares reached 8.11 trillion yuan, up from 7.66 trillion yuan at the end of September.

"Positive economic figures and the good performance of surrounding markets provided external conditions for the hike in domestic markets, and the index will remain stable despite some small fluctuations in the fourth quarter," said Wang Shuxu, an analyst with Guohai Securities.

The index lost 6.09 percent in the third quarter after increasing 65 percent in the first half of the year, as investors worried that an oversupply of new share sales and the possible tightening of fiscal policy would curb liquidity.

"The index will fluctuate around 3,000 points in the next one or two months, and the earnings of listed companies may push up some stocks but generally trading will be rather flat," Zhongyuan Securities wrote in a report.

Oil producers were strong after crude rose to US$71.70 a barrel on Thursday. Gold futures added 1.2 percent to US$1,056.30 an ounce.

PetroChina rose 3.70 percent to 13.17 yuan. China Petroleum & Chemical Corp was up 4.34 percent to 11.79 yuan.

Zhongjin Gold Co, Jiangxi Copper, Aluminum Corporation of China Ltd and several other metal producers all surged by the daily limit of 10 percent.

Banks were also strong after Finance Minister Xie Xuren pledged to maintain a proactive fiscal policy.

The Hang Seng Index in Hong Kong rose for four consecutive days and closed at 21,499.44 points yesterday.


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