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Market closes at two-month high

SHANGHAI'S key stock index soared more than 2 percent to its highest close in almost two months today amid growing expectation of government plans to boost China's economy.

The Shanghai Composite Index added 2.44 percent, or 49.13 points, to 2060.81 points.

Winners outnumbered losers 837 to 37 while eight stocks remained unchanged. Turnover swelled to 96.7 billion yuan (US$14.22 billion), up from yesterday's 61.8 billion yuan.

The Shenzhen Composite Index, which tracks the smaller domestic market, was up 2.57 percent, or 16.04 points, to 639.05 points.

"Investors are optimistic that favorable measures will be rolled out. Shares were buoyed because stimulus packages are pending approval of the State Council," Golden Sun Securities Co wrote in a research note.

Premier Wen Jiabo told London's Financial Times on Monday that China is actively exploring and expanding the use of foreign exchange reserves. A string of measures to boost the machinery and textile industries was reportedly submitted to the cabinet on Wednesday. Packages to bolster the shipbuilding industry ware also expected.

Garment makers and machinery builders gained. Youngor Group Co surged 5.3 percent to 8.94 yuan and Ningbo Shanshan Co jumped 5.34 percent to 8.48 yuan.

Guangzhou Shipyard International Co, a unit of China's biggest shipbuilder, climbed the 10 percent daily limit to 18.26 yuan after the Ministry of Industry and Information Technology said China's shipbuilding industry posted a 51 percent rise in profit last year to 28.3 billion yuan.

Financial shares were also on the move up. China Merchants Bank Co, China's most profitable lender, increased 3.04 percent to 13.91 yuan. Shanghai Pudong Development Bank, the Chinese partner of Citigroup Inc, rose 2.33 percent to 16.69 yuan.

China Construction Bank Corp rose 1.49 percent to 4.08 yuan after saying it received regulatory approval to raise as much as 40 billion yuan selling subordinated bonds to boost capital.

Industrial & Commercial Bank of China Ltd, the nation's biggest listed lender, gained 1.91 percent to 3.73 yuan. The bank said its overseas assets increased by 15 percent last year as the lender curbed losses tied to the global financial crisis.

Bucking the upward trend, real estate developers dropped after the central government stopped plans by local authorities to offer tax rebates on home purchases.

China's Cabinet asked Chongqing city government to suspend a policy that will offer tax rebates for home purchases.

Gemdale, a Chinese developer that partnered with ING Groep NV, dropped 0.65 percent to 7.59 yuan. Poly Real Estate, the second-biggest, slid 0.12 percent to 1649 yuan.

Elsewhere, Aluminum Corp of China Ltd jumped by the 10 percent limit to 7.79 yuan on speculation the nation's largest producer of the metal may benefit from the potential purchase of Rio Tinto Group's assets by its parent. A price increase in aluminum also contributed to the stock rally. Aluminum futures gained as much as 2.4 percent on the Shanghai Futures Exchange.

Xi'an Aircraft International Corp edged up 0.12 percent to 16.76 yuan after the company said it signed an agreement to test wings and supply parts for the Airbus SAS A320-series airliners being assembled in China.

"Considering the unrest surrounding market and obvious falling profit margins of listed companies, the market will not see a sharp rebound," Golden Sun Securities Co wrote in the note.


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