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Market accelerates with automakers

SHANGHAI'S key stock index erased its morning losses and rose over 1 percent, led by automakers on government incentives to boost rural auto sales.

The Shanghai Composite Index rose 1.15 percent, or 24.44 points, to 2,153.29 points. Gainers outnumbered losers 701 to 147 while 31 remained unchanged. Turnover shrank to 61.35 billion yuan (US$9.02 billion) from 71 billion yuan on the previous trading day.

The Shenzhen Composite Index, which tracks the smaller domestic market, was up 1.4 percent, or 9.69 points, to 702.36 points.

Automakers gained on government subsidies to encourage farmers to buy vehicles. SAIC Motor Co, the nation's largest carmaker, advanced 2.71 percent to 9.1 yuan. Dongfeng Automobile Co surged 3.09 percent to 4 yuan. Jiangling Motors Corp, the Chinese commercial vehicle partner with Ford Motor Co, gained 2.11 percent to 5.8 yuan.

Beiqi Foton Motor Co, China's biggest commercial-vehicle maker said sales in January and February rose 10.6 percent from last year to 64,560. The shares inched up 0.12 percent to 8.49 yuan.

Farmers who buy minivans or light trucks will be entitled to a funding equivalent of 10 percent of the vehicle's price, with a maximum subsidy of 5,000 yuan, the Ministry of Finance said at the end of last week as a new stimulus to spur vehicle demand.

The government is trying to boost domestic spending as the global recession cuts demand for the nation's exports and trims investment by overseas companies. Foreign direct investment in China fell 15.8 percent from a year earlier last month, the fifth straight month of declines, data from the commerce ministry showed today.

Premier Wen Jiabao reaffirmed the nation's 8 percent growth target for 2009 as he closed the annual meeting of the National People's Congress on March 13, saying China has "adequate ammunition" to add extra stimulus if necessary.

Bucking the upward trend, declining transport rates dragged shipping lines lower. China Cosco Holdings Co inched down 0.1 percent to 10.38 yuan after three consecutive falls in the Baltic Dry Index, a measure of shipping costs for commodities. China Shipping Container Lines Co dropped 0.3 percent to 3.27 yuan.

Elsewhere, China Shenhua Energy Co, the nation's largest coal producer, added 0.37 percent despite a drop in sales. The nation's largest coal producer posted a 21 percent drop in sales last month as demand for the fuel fell. The company said it sold 15 million metric tons of coal in February, compared with 18.9 million tons a year earlier.

PetroChina Co increased 0.47 percent to 10.66 yuan. PetroChina and China Petroleum & Chemical Corp reportedly raised fuel prices in Shanghai on the night of March 13.

Huaxin Cement Co, the Chinese affiliate of Holcim Ltd, said it plans to raise as much as 4 billion yuan by issuing new shares in a private placement to finance an expansion in production. The shares eased 0.28 percent to 1.77 yuan.


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