SHANGHAI - Stocks on the Chinese mainland rose, spurring the biggest gain for the benchmark index in a week, on speculation inflation will decelerate the rest of the year and the nation's economic growth may sustain earnings.

SAIC Motor Corp climbed 1.9 percent after the nation's car sales rebounded in June after dropping the previous month. Anhui Water Resources Development Co jumped the most this month after Xinhua News Agency reported the government will speed up investment in water projects. China Shenhua Energy Co led declines among coal companies as raw-material prices fell.

The Shanghai Composite, which tracks the bigger of China's stock exchanges, rose 4.92 point, or 0.2 percent, to 2802.69 at the 3 pm close on Monday. The CSI 300 Index added 0.1 percent to 3113.21.

The Shanghai gauge has fallen 0.2 percent this year. The index has pared a loss of as much as 6.7 percent on speculation fiscal policies such as spending in affordable housing will support the economy and after Premier Wen Jiabao said on June 24 efforts to stem inflation have worked.

"The June inflation number had already been widely expected by the market and its impact will be minor," said Ling Peng, chief strategist at Shenyin & Wanguo Securities Co in Shanghai. "Inflation may have already peaked."

June inflation may be the peak this inflationary cycle as price increases are slowing on a month-on-month basis, according to CITIC Securities Co. Consumer prices may rise about 6 percent this month and the central bank isn't likely to raise interest rates the rest of the year, analysts led by Zhu Jianfang wrote in a report on Monday.

"Policy tightening may ease with inflation peaking soon, and economic growth may pick up again," said Shen Yang, a Shanghai-based fund manager at Lombarda China Fund Management Co, a venture with Italy's fourth-biggest bank. "That's positive for the stock market."

SAIC, China's largest carmaker, gained 1.9 percent to 18.65 yuan ($2.88). FAW Car Co, which makes passenger cars in China with Volkswagen AG, advanced 2.7 percent to 15.14 yuan.

Chongqing Changan Automobile Co, the Chinese partner of Ford Motor Co and Mazda Motor Corp, added 1 percent to 5.32 yuan.

Deliveries of cars including multipurpose and sport utility vehicles to dealerships rose 6.2 percent to 1.1 million units last month, the China Association of Automobile Manufacturers said in a statement on July 8. The increase follows a 0.1 percent decline in May, the first drop since January 2009.

Anhui Water Resources surged 3.8 percent to 15.65 yuan. China Gezhouba Group Co added 2 percent to 12 yuan. Gansu Dayu Water-saving Group Co jumped 8.2 percent to 12.56 yuan.

China will accelerate investment in water projects, Xinhua reported over the weekend, citing a politburo meeting chaired by President Hu Jintao. China will make agricultural irrigation projects a priority and boost construction of dams and reservoirs, Hu said in the Xinhua statement posted on the central government's website.

Air China Ltd, the largest international carrier, rose 1.7 percent to 10.37 yuan. China Southern Airlines Co, the nation's biggest carrier by fleet size, gained 2.5 percent to 8.48 yuan.

Bloomberg News