SHANGHAI, Mar. 23 (AP) -- Chinese markets inched up to a new record for a third straight day Friday, buoyed by gains in railway stocks.

The benchmark Shanghai Composite Index ended up 0.1 percent at 3074.29. The Shenzhen Composite Index for China's smaller second market rose 1 percent to 816.92, its fourth straight record close.

Analysts said they expected gains to moderate after a week of strong increases.

"Investors had better not add more positions to their portfolios for now, because stock valuations are high," said Wu Jianxiong, an analyst at Guotai Junan Securities. Zhang Yidong, an analyst at Industrial Securities, said short-term volatility is likely but "there should be no problem for the market to stay bullish in the long run."

Blue chip Guangshen Railway rose 9.3 percent on expectations of growth from the completion of a new rail line. Daqin Railway closed up 1.3 percent.

Bank of China Ltd., the country's No. 2 commercial lender, fell 0.8 percent despite reporting a 65 percent rise in 2006 profit on Thursday.