Blue chips lift Chinese index to nine-day high

DOMESTIC stocks climbed and pushed the Shanghai index to a nine-day high in the morning session today, buoyed by rising blue chips across the board.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, jumped 1.37 percent, or 69.87 points, to 5,171.65 at 11:30am today. The Shanghai index opened at 5,132.91 at 9:30am today, 31.13 points higher than its close at 5,101.78 at 3pm last Friday.

Gains in the Shanghai market outnumbered losses 717 to 48 and 81 were unchanged.

The Shenzhen Composite Index, which covers the smaller mainland stock market, gained 2.09 percent, or 28.72 points, to 1,404.61.

Copper stocks rose thanks to rising copper prices.

Tongling Nonferrous Metals, China's biggest copper producer, advanced 1.97 percent, or 0.48 yuan (6 US cents), to 24.82 yuan. Jiangxi Copper Co, the second-biggest, added 3.32 percent, or 1.67 yuan, to 51.99 yuan. Yunnan Copper Industry Co, the third-largest, climbed 2.94 percent, or 1.15 yuan, to 52.81 yuan.

Copper futures surged 4.5 percent in New York on Friday, the most in five weeks, after metal inventories in China slumped amid rising demand. The metal gained 4.1 percent in London, the most in three months.

Airlines were helped by a rising currency as the Chinese yuan jumped to its strongest since the dollar peg ended in 2005.

Air China, the world's biggest airline by market value, jumped 1.65 percent, or 0.43 yuan, to 26.42 yuan and China Eastern, the nation's third-largest carrier, added 1.66 percent, or 0.31 yuan, to 19.04 yuan.

The yuan rose 0.14 percent to 7.3595 to the dollar at 10:54am in Shanghai after the central bank set the reference rate at 7.3315 today, according to the China Foreign Exchange Trade System. It traded to as strong as 7.3405 today.

This was the highest since a dollar link was scrapped two years ago after the central bank said it will boost exchange-rate flexibility, raising speculation the currency's trading band will be widened.

The yuan has risen every month this year, and is up 0.6 percent since the start of December. US Treasury Secretary Henry Paulson this month said it's in China's interests to allow faster currency gains.

Elsewhere, SAIC Motor Co, China's No. 1 car maker, gained 0.84 percent, or 0.82 yuan, to 26.29 yuan. Parent Shanghai Automotive Industry Corp (Group) will sign a merger agreement with Nanjing Automobile Group Corp on Wednesday, creating an auto maker with annual sales of more than 2 million vehicles, the Oriental Morning Post said.