Chinese shares surge nearly 4.0 pct in morning trading

Chinese share prices surged 3.98 percent by midday Monday, led by financials after two major lenders projected strong first-half earnings, dealers said.

Financials rallied after China CITIC Bank projected first-half net profit would rise by more than 150 percent year-on-year, while China Merchants Bank estimated first-half net profit would be up more than 100 percent year-on-year.

Analysts said banks' strong performance eased investor concern about slowing corporate earnings growth, but added that there were still economic uncertainties linked to inflation and high oil prices.

The benchmark Shanghai Composite Index, which covers both A and B shares, added 106.39 points to end the morning 3.98 percent higher at 2,776.28.

"Whether the market can sustain its gains or when the market can run out its bearish course, will depend on the performance of large-cap stocks like banks and oil companies," Chen Jinren at Huatai Securities told Dow Jones Newswires.

Airliners also turned sharply higher on expectations of strong growth in passenger traffic during the Beijing Olympic Games in August.

Air China and China Southern Airlines both rose by the 10 percent daily limit, while China Eastern Airlines was up nearly nine percent.

Sentiment received another boost after Vice Premier Wang Qishan made remarks on the weekend regarding healthy growth in the financial industry, traders said.

The Shanghai A-share index rose 111.76 points, or 3.99 percent, to 2,911.87 points, while the Shenzhen A-share index jumped 33.79 points, or 4.00 percent, to 879.41.

(Agencies)