Banking sector shares rose the most in yesterday's trade. The Shanghai Pudong Development Bank soared 9.8 percent to close at 25.4. Bank of China surged 8.5 percent to close at 5.29, after posting a net profit increase of 50 percent yesterday.

An investor monitors stock movements at a stock exchange market in Shanghai March 19, 2007. China's main stock index jumped 2.87 percent on Monday, nearing its all-time high, as bank shares surged following an interest rate hike at the weekend. [Reuters]

Other factors contributing to the surge in the banking sector included profit growth and the interest rate hike. "Nearly all banks saw net profit growth of over 30 percent in 2006," said Qian Kun, an analyst at Changjiang Securities.

Gu Junlei, an analyst at Orient Securities, agreed. Gu said the interest rate hike was likely to further widen banks' profit margins.

Transport, electronic instruments and paper-making stocks also performed well yesterday. Turnover on the Shanghai Stock Exchange was 94.8 billion yuan.

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