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Key index jumps to biggest daily gain

SHANGHAI'S key stock index jumped more than 3 percent, the biggest daily gain in three months, and closed above 2,700 yesterday, after new surveys showed manufacturing improving, boosting confidence in a rapid economic recovery in China.

The Shanghai Composite Index rose 3.36 percent, or 88.35 points, to close at 2,721.28 points, the highest level in 10 months.

Turnover stood at 156.58 billion yuan (US$23.03 billion) from 103.2 billion yuan last Wednesday before the Dragon Boat Festival holiday.

"A string of favorable news during the break as well as strong performances in surrounding markets boosted local sentiment in the market," said Zhang Suoqing, an analyst with Shenzhen Zhongzheng Investment Consulting Co.

Although shares "are expected to keep rising (today) there is still a risk of a reversal due to reckless gains," Nanjing Securities Co wrote in a research note.

Oil refiners surged after crude prices climbed 30 percent last month to US$66. PetroChina, China's largest oil producer and the biggest component in the index, soared 4.89 percent to 14.17 yuan. Sinopec, Asia's largest oil refiner, added 1.06 percent to 10.49 yuan yesterday.

Coal producers were also strong. China Shenhua Energy Co, Asia's largest coal firm, surged 6.64 percent to 27 yuan, Datong Coal industry Co, China's second-largest coal company by capacity, soared 10 percent to 36.77 yuan and Pindingshan Tian'an Coal Mining Co gained 9.92 percent to 35.01 yuan.

Property developers also gained after the State Council, or Cabinet, announced over the holiday favorable policies to boost fixed asset investment.

Gemdale Corp, a Chinese partner of ING Group NV, jumped by the 10 percent daily cap to 17.24 yuan, Poly Real Estate Group Co, China's second-largest developer by market value, rose 5.71 percent to 22.6 yuan.


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