Blue chips keep Shanghai index going up

SHANGHAI stocks rose for a fourth day today, pushing the index to its highest close in more than a month since November 21.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, jumped 1.37 percent, or 132.48 points, to close at 5,234.26 at 3pm 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.

Winners in the Shanghai market outnumbered losers 647 to 113 and 86 were unchanged.

The Shenzhen Composite Index, which covers the smaller mainland stock market, gained 1.72 percent, or 23.69 points, to 1,399.58.

Consumer-related stocks including Suning Appliance Co and Gree Electric Appliances Inc gained after the government said it plans to subsidize farmers' purchases of electrical appliances.

Suning Appliances, China's second-biggest home-device retailer, gained 3.76 percent, or 2.47 yuan (34 US cents), to 68.12 yuan. Gree Electric Appliances Inc, China's biggest maker of home air conditioners, surged 9.25 percent, or 4.17 yuan, to 49.25 yuan, for a record close.

Farmers in the provinces of Shandong, Henan and Sichuan will get government grants equal to 13 percent of the price of products such as television sets and refrigerators, the Ministry of Finance and Ministry of Commerce said in statements posted on their Websites.

Copper stocks were among the winners stocks this morning thanks to rising copper prices.

Tongling Nonferrous Metals, China's biggest copper producer, advanced 1.11 percent, or 0.27 yuan, to 24.61 yuan. Yunnan Copper Industry Co, the third-largest, climbed 2.53 percent, or 1.30 yuan, to 52.60 yuan.

Copper futures rose by the exchange-imposed 5 percent daily limit for a second day on the Shanghai Futures Exchange, as stockpiles slumped to a 10-month low, raising concern supply may not keep pace with demand. Zinc also climbed by the maximum 4 percent.

Oil-related stocks performed strongly in the market today. PetroChina Co, the country's biggest oil producer, jumped 4.65 percent, or 1.42 yuan, to 31.96 yuan. China Oilfield Services Limited roared to the daily cap of 10 percent, or 3.22 yuan, to close at 35.41 yuan.

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 while China Eastern, the nation's third-largest carrier, added 1.66 percent, or 0.31 yuan, to 19.04 yuan.

The yuan rose as high as 7.3405 to the dollar today in Shanghai after the central bank set the reference rate at 7.3315 today, according to the China Foreign Exchange Trade System.

This was the highest since a dollar link was scrapped two years ago after the central bank said it would 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, inched up 0.88 percent, or 0.23 yuan, to 26.30 yuan. Parent Shanghai Automotive Industry (Group) Corp 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.