China shares up on government support pledge

SHANGHAI — Chinese shares rose for a second day Tuesday on investor hopes about government pledges to boost economic growth.

The benchmark Shanghai Composite Index jumped 3 percent, or 56.43 points, to close at 1937.05. The Shenzhen Composite Index for China's smaller second market rose 2.7 percent to 586.33.

The rally helped the market recover losses from eight straight down sessions before the New Year. But some analysts expressed caution about whether it could last.

"This is probably just a technical recovery as a series of stimulus policies already was expected," said Mao Sheng, an analyst for Huaxi Securities in the western city of Chengdu. "The grim outlook of companies' first quarter reports is also a factor to stop investors from going long."

Buying sentiment was strong across a range of industries after weekend comments by Premier Wen Jiabao that Beijing would take steps to help the steel and auto industries.

On Tuesday, a deputy housing minister, Qi Ji, said the government would increase possible financing methods for developers and improve access to low-cost housing.

China Vanke Ltd., the country's biggest developer rose 3 percent to 6.9 yuan, while rival Poly Real Estate Group added 3.2 percent to 15.89 yuan.

The strongest gains were by coal producers, whose share prices fell last year, creating opportunities for bargain-hunting.

Pingdingshan Tianan Coal Mining Co. and Kailuan Clean Coal Ltd. both rose by the daily 10 percent limit. Pingdingshan ended at 14.75 yuan, while Kailuan surged to 13.33 yuan. China Shenhua Energy Ltd., the country's biggest coal producer, shot up 7.8 percent to 19.67 yuan.

Telecom shares rose on rumors that long-delayed licenses for third-generation mobile phone service might be released Wednesday. China Unicom Ltd. climbed 3.5 percent to 5.29 yuan, while equipment supplier ZTE Corp. posted a 4 percent gain to 29 yuan.

Banks rose after midsize lender Pudong Development Bank Ltd. reported its 2008 profit rose 128 percent over the previous year.

Pudong soared 5.5 percent to 14.48 yuuan. Industrial & Commercial Bank of China Ltd., China's biggest commercial lender, rose 2.8 percent to 3.7 yuan. Bank of China Ltd. added 1.7 percent to 3.06 yuan, while China Construction Bank, Ltd. gained 2.1 percent to 3.97 yuan.

In currency markets, China's yuan weakened to 6.8400 to the U.S. dollar from Monday's close of 6.83142.

(bc-jrm)

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