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Optimism lifts index over 2%

SHANGHAI'S key stock index ended more than 2 percent higher yesterday on investor optimism as the domestic economy has shown signs of recovery.

The Shanghai Composite Index rose 2.14 percent, or 53.52 points, to close at 2,557.46 points. Turnover shrank to 140.5 billion yuan (US$20.66 billion) from 157.6 billion yuan on Friday. Gainers outnumbered losers by 781 to 63.

"There has been a recovery in overall market sentiment and the stable performance of heavy weights propped up the benchmark index," said Wu Ling, an analyst with S&E Securities Brokerage Co. "The index is not likely to experience sharp falls as heavyweights are still undervalued."

The index's rebound "is expected to last for some time and there are possibilities the index would accelerate its upward pace," said Kang Hongtao, an analyst from Guoyuan Securities Co.

China's stimulus plan has shown "better-than-expected" results in reviving growth and helped restore market confidence, Premier Wen Jiabao said at the Boao forum over the weekend.

China's economy grew 6.1 percent in the first quarter and industrial output also expanded.

Airlines led the gains as ticket prices rose and are set to climb by an average 20 percent under a new ticket-pricing system which started yesterday.

Air China, the nation's largest international carrier, surged 8.64 percent to 7.29 yuan while China Southern Airlines Co climbed 5.85 percent to 6.33 yuan. Hainan Airlines Co gained 7.44 percent to 6.21 yuan and Shanghai Airlines Co rose 5.06 percent to 4.98 yuan.


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