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China's Shares Up On Economic Optimism

The Associated Press

BEIJING (AP) — China's shares rose to a one-year high Monday amid optimism about the country's economic outlook, while oil refiners climbed on lower crude costs.

The benchmark Shanghai Composite Index added 15.01 points, or 0.6 percent, to close at 2896.30, the highest level since June 12, 2008. The Shenzhen Composite Index for China's smaller second exchange added 5.1 points, or 0.5 percent, to 938.76.

"The overall market today was optimistic and hit a high since rebounding, thanks to the good performance of some heavyweight stocks," said Xu Zhiyuan, an analyst for Capital Edge Investment & Management in Shanghai.

"But the market may retreat sometime this week because we've seen a bubble in investors' sentiment," Xu said. "Without the support of the real economy, the rally cannot sustain for a long run."

China's market rebound has been fueled by government data showing investment, retail sales and other indicators improving amid a government stimulus plan.

Premier Wen Jiabao was quoted Sunday by state media as saying the economy was starting to improve steadily and promised Beijing would maintain easy credit to support growth.

Industries gained across the board, led by banks and other financial stocks.

Bank of China Ltd. climbed 4.9 percent to 4.50 yuan, while Industrial & Commercial Bank of China Ltd., the country's biggest commercial lender, added 3.1 percent to 5.35 yuan. Ping An Insurance Co. of China rose 3.4 percent to 46.73 yuan.

Oil refiners rose on a decline in global crude prices, which will reduce costs and improve their profits. China Petroleum & Chemical Co., or Sinopec, Asia's biggest refiner by volume, rose 1.5 percent to 10.52 yuan while rival PetroChina Ltd. added 0.9 percent to 14.25 yuan.

Real estate, metals and consumer goods stocks also rose on expectations of stronger demand.

In currency markets, China's yuan strengthened to 6.8250, down from Friday's close of 6.8363.