Chinese shares close 1.13 percent higher

SHANGHAI, Dec 7, 2007 (AFP) - Chinese share prices ended up 1.13 percent Friday, buoyed by a rebound in steel shares and gains on Wall Street overnight, dealers said.

But they said sentiment remained fragile after a government announcement this week that China would shift its monetary policy stance from prudent to "tight" in 2008 to tame inflation and prevent economic overheating.

Other metal stocks also jumped after Canadian miner Northern Peru Copper Corp said late Thursday it had agreed to a cash takeover offer of 455 million Canadian dollars (450 million dollars) by Jiangxi Copper and state-run China Minmetals Nonferrous Metals Co.

The benchmark Shanghai Composite Index gained 56.68 points to 5,091.76 on turnover of 71.66 billion yuan (9.6 billion dollars).

"The policy shift will have a long-term impact on the economy. The market may continue to fluctuate due to uncertainty over government policy," said Cao Yan, an analyst at Soochow Securities.

Steel makers resumed their rise after taking a short break Thursday, after analysts said their valuations were low compared with other sectors.

Baoshan Iron and Steel, the listed unit of China's largest steel maker Baosteel Group, rose 0.22 yuan to 16.72. Baosteel denied Friday that it was planning a bid for Rio Tinto, but said it was closely watching BHP's possible take-over of the Australian mining giant.

Other metal stocks also gained on news of fresh overseas acquisitions by Chinese mining companies.

Jiangxi Copper surged 2.05 yuan or 4.36 percent to 49.03 after Northern Peru Copper said it supported an all-cash bid by Jiangxi Copper and China Minmetals Nonferrous of 13.75 Canadian dollars per share.

"Metals stocks rebounded after they were hit earlier by weaker commodity prices," said Wang Xiaomin, an analyst at Xiangcai Securities.

Markets also reacted favorably to a rally Thursday on US stock markets after US President George W. Bush announced a major mortgage rescue plan aimed at helping stave off a wave of mounting home foreclosures.

But in Shanghai, property stocks were weak on reports that property prices have begun to fall amid sluggish trade in some cities such as Shenzhen.

Property developer Gemdale Corp fell 1.89 yuan to 47.09.

Hong Kong-listed shipper China Shipping Container Lines, which is expected to debut in Shanghai on December 12, said Friday it raised 15.5 billion yuan from the domestic share offer.

The Shanghai A-share Index rose 59.39 points or 1.12 percent to 5,342.92 on turnover of 71.10 billion yuan and the Shenzhen A-share Index was up 22.01 points or 1.62 percent at 1,382.20 on turnover of 34.51 billion yuan.

The Chinese yuan ended the day at 7.4004 to the US dollar compared with its finish of 7.4117 on Thursday.

The Shanghai B-share Index gained 5.19 points or 1.47 percent to 358.96 on turnover of 562.00 million US dollars and the Shenzhen B-share Index was up 11.06 points or 1.55 percent at 724.81 on turnover of 331.17 million Hong Kong dollars (44.2 million US dollars).