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China's stocks rise most in six months as economy concern wanes

(Agencies)
Updated: 2010-05-24 16:13
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China's stocks rallied, driving the benchmark index to its biggest gain in almost six months, on speculation the government will abstain from further measures to cool the property market given Europe's debt crisis.

The Shanghai Composite Index rose 78.79, or 3.1 percent, to 2,662.31 as of 1:38 pm local time. That's the biggest gain since Nov 30, when the gauge surged 3.2 percent after the government pledged to maintain stimulus policies. The CSI 300 Index added 3.8 percent to 2,873.81.

"The market is expecting a softening in the government's stance on tightening given the uncertain outlook on global growth," said Larry Wan, Shanghai-based deputy chief investment officer at KBC-Goldstate Fund Management Co, which oversees about $583 million.

The Shanghai gauge fell 4.2 percent last week, extending a 21 percent decline for the year, on concern Europe's debt crisis may curb demand for the country's exports at the same time as the government intensifies steps to curb bubbles in assets including real estate.

A measure of property stocks jumped 4.7 percent on the Shanghai Composite Index today, the biggest gain among the five industry groups. The gain caps a two-day, 8.1 percent rise for the real-estate index, the most since May 2009.

China's Vanke advanced 4.7 percent to 7.74 yuan. Poly Real Estate Group Co, the second-largest builder, added 8.2 percent to 12.07 yuan.

China should be cautious in introducing new tightening measures as the global economic environment is complex, Xu Lianzhong, an official with the National Development and Reform Commission's price monitoring center, wrote in a commentary published today in the China Securities Journal.

The European debt problem is one of many global economic uncertainties that China faces, Xu wrote.

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Europe is China's biggest export destination, making up 20 percent of its total overseas sales. The yuan has appreciated more than 14 percent against the euro in the past four months and the gain is putting pressure on China's exporters, Ministry of Commerce spokesman Yao Jian said May 17.

Beiqi Foton added 8 percent to 19 yuan. FAW Car Co gained 4.7 percent to 17.98 yuan.

The government will extend subsidies for trade-in vehicles to the end of this year, the Shanghai Securities News said, citing unidentified people. The trade-in policy for vehicles was due to expire on May 31 after its introduction on June 1, 2009.

Airlines rose after the mainland and Taiwan agreed to add 100 direct cross-Straits flights a week, according to a statement by Taiwan's "Civil Aeronautics Administration" on May 22.

Air China Ltd, the nation's largest carrier by market value, climbed 7.1 percent to 11.23 yuan. China Eastern Airlines Corp advanced 4.8 percent to 7.49 yuan.

Xinjiang Tianfu Thermoelectric Co increased by the daily limit of 10 percent to 11.75 yuan while oil and gas supplier Xinjiang Guanghui Industry Co advanced 5.4 percent to 28.70 yuan.