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Key stock index surges over 2%

SHANGHAI'S key stock index jumped more than 2 percent yesterday to a 13-month closing high and broke the 3,100 barrier, with financial shares joining a rally on Wall Street.

The Shanghai Composite Index climbed 2.1 percent, or 64.6 points, to close at 3,145.16. Turnover rose slightly to 178.3 billion yuan (US$26.22 billion) from 172.8 billion yuan on Monday.

A research house under China's central bank said in a report the government should maintain the easy monetary policy and promote credit growth. The central bank has also indicated that it would make adjustments on reserve requirements and interest rate based on the market liquidity.

Shares opened higher in the wake of rallies in the US, China Merchants Securities Co wrote in a research note, adding that the financial sector later led the local market up on the central bank's report. Insurers and steel producers bolstered the rebound in the market.

China Pacific Insurance (Group) Co surged 6.09 percent to 27.18 yuan while Ping An Insurance (Group) Co soared 8.94 percent to 59.57 yuan and China Life Insurance Co, the country's largest insurer, rose 4.82 percent to 29.57 yuan.

Baoshan Iron and Steel Co, the nation's biggest steel maker, added 3.52 percent to 8.24 yuan after the firm recently announced it would raise August prices by up to 14 percent. Anyang Iron and Steel Inc jumped by the 10-percent daily cap to 5.48 yuan, and Wuhan Iron and Steel Co gained 8.14 percent to 9.43 yuan.

Property shares also gained, with Shanghai Lujiazui Finance and Trade Zone expanding 4.41 percent to 28.15 yuan and Poly Real Estate Group Co, China's second-largest developer by market value, rising 1.75 percent to 29.71 yuan.

Shares of China Eastern Airlines and Shanghai Airlines climbed for a second straight day after news of their merger.


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