SHANGHAI stocks rallied in the morning session led by China Eastern Airlines, which resumed trading today after signing an acquisition plan.

The Shanghai Composite Index, which tracks both yuan-denominated A shares and hard-currency B shares, gained 1.89 percent, or 98.61 points, to 5,317.44 at 11:30am.

The Shenzhen Composite Index, which covers the smaller mainland stock market, rose 1.99 percent, or 29.05 points, to 1,486.88.

China Eastern Airlines, the third biggest carrier in China, rose by the daily limit of 10 percent to 10.56 yuan (US$1.38) per share after it announced a deal to sell a combined 24 percent stake to Singapore Airlines and Temasek Holdings, Singapore's government investment arm.

Its shares had been suspended from trading since May 22 after reports about the deal surfaced.

China Eastern's growth also spurred other airliners.

Air China rose 10 percent to 21.12 yuan and China Southern Airlines jumped 10 percent to 22.87 yuan.

Shanghai Airlines rose 9.98 percent to 15.32 yuan and Hainan Airlines rose 9.89 percent to 11.56 yuan.

China Petroleum & Chemical Corp rose 1.78 percent, to 16.02 yuan after announcing plans to spend 62.7 billion yuan to build a natural gas pipeline linking western China and Shanghai.

Citic Securities Co rose 2.48 percent to 91.20 yuan. China's biggest publicly traded brokerage will trade 333.73 million new shares tomorrow.