China shares up on government support plans
AP - Tuesday, January 6
SHANGHAI, China - China's shares jumped Monday on the first trading day of 2009 after the government promised to take new steps to boost economic growth.
The benchmark Shanghai Composite Index rose 3.3 percent, or 59.91 points, to close at 1880.72. The Shenzhen Composite Index for China's smaller second market added 3.2 percent to 571.13.
During a weekend visit to exporters, Premier Wen Jiabao said Beijing would enact new measures to help the steel and auto industries, according to state media. That comes on top of a massive stimulus package announced in November.
"In the short term, the market is still optimistic as there will be more stimulus policies introduced," said Zhai Peng, an analyst for Guotai Junan Securities in Shanghai.
"But when the period of intensive policies pass and the pressure of deflation enhances, the market is very likely to fluctuate after February."
Mining stocks shot up as domestic commodity prices rebounded.
Aluminum Corp of China, also known as Chalco, leapt 6.3 percent to 6.54 yuan. Jiangxi Copper Ltd., China's second-biggest producer of the metal, jumped 9.5 percent to 10.53 yuan. Baoshan Iron & Steel Ltd., China's biggest steel maker, advanced 7.54 percent to 4.99 yuan.
Telecom shares rallied after the government said licenses for third-generation service will be issued before the Lunar New Year, which is Jan 26. Hisense Group rose 6.3 percent to 6.8 yuan, and ZTE Corp. ended 2.5 percent up to 27.89 yuan.
Cement makers rallied on expectations that government plans for higher spending on highways and other infrastructure will boost revenues.
Tangshan Jidong Cement Ltd. soared by the daily limit of 10 percent to 10.89 yuan and Hebei Taihang Cement Ltd. added 8.7 percent to 5.6 yuan.
In currency markets, China's yuan strengthened to 6.8286 to the U.S. dollar up from Saturday's close of 6.8464.
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