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Recovery talk leads market to 7-month high

SHANGHAI'S key stock index rose for a third day to close at a seven-month high yesterday, after a brokerage's report said the index would rebound along with the recovery of the economy.

The benchmark Shanghai Composite Index was up 0.72 percent to close at 2,425.29 points, the highest since August 21. Turnover was 172.5 billion yuan (US$25.2 billion).

China stocks will benefit from a "V-shaped" recovery in the world's third-largest economy, Citic Securities said in a report yesterday.

The research report by the country's biggest listed brokerage predicted an increase in corporate profits in the second quarter, boosted by the government's stimulus package. It also said brokerages, banks and insurance companies would outperform the market.

Ping An Insurance, China's second-biggest insurer, advanced 3.2 percent to 40.02 yuan. China Life Insurance Co, the country's largest life insurance company, was up 2.81 percent to 23.76 yuan.

Industrial and Commercial Bank of China, the nation's biggest lender, edged up 0.5 percent to 3.99 yuan. Bank of Communications advanced 2 percent to 6.62 yuan. China Merchants Bank rose 1.98 percent to 16.51 yuan. China Construction Bank edged up 1.62 percent to 4.39 yuan.

"The index will continue to rise as there is enough liquidity in the market and we're confident blue chips will remain strong in the future," said a research note by Nanjing Securities.

Energy companies and coal producers were strong in the second half of trading. Datong Coal Industry Co surged the daily limit of 10 percent to close at 20.49 yuan.


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