Chinese shares rise nearly three percent by midday

Chinese share prices rose 2.98 percent by midday Wednesday as a sharp decline in oil prices eased concerns over rising fuel costs and inflation, dealers said.

Tumbling oil prices fuelled a rally in oil refiners, airlines and other transport stocks, giving investors some respite amid fears that crude costs would hurt corporate earnings and push up prices, traders said.

New York's main oil futures contract, light sweet crude for August delivery, fell 5.33 dollars to close at 136.04 dollars a barrel overnight.

"Any decline in oil prices will boost Chinese stocks because inflation is currently the foremost worry in investors' minds," Capital Securities' strategist Amy Lin told Dow Jones Newswires.

Banks remained strong amid expectations of more strong first-half earnings forecasts. Analysts said lenders may extend the rally further in the near term given the momentum.

The benchmark Shanghai Composite Index, which covers both A and B shares, rose 83.88 points to end the morning 2.98 percent higher at 2,898.83.

The Shanghai A-share index added 88.28 points, or 2.99 percent, to 3,040.73 points, while the Shenzhen A-share index was up 13.34 points, or 1.48 percent, to 912.44.

(Agencies)