Shanghai's key stock index rose to its highest since March 21 thanks to a wide rally across the board before the market suspends trading for the May Day holiday.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, gained 4.82 percent, or 169.70 points, to 3,693.11 at 3pm.

Gainers in the Shanghai market outnumbered losers 771 to 18 while one stock did not change.

The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was up 3.97 percent, or 41.96 points, to 1,097.76.

The stock markets will reopen on Monday.

Industrial & Commercial Bank of China Ltd, the nation's biggest lender, and Bank of Communications Ltd advanced for a second day as they became the latest banks to report higher profits.

Industrial & Commercial Bank, the nation's biggest listed lender, also known as ICBC, rose 3.26 percent to 6.66 yuan (95 US cents). First-quarter profit rose 77 percent as companies borrowed more and fees from wealth management increased.

Bank of Communications, partly owned by HSBC Holdings Plc, rose 3.34 percent to 10.83 yuan as first-quarter profit doubled. Bank of Beijing Co, part-owned by ING Groep NV, gained 4.48 percent, to 17.26 yuan. Earnings in the period almost tripled.

Huaxia Bank Co, partly owned by Deutsche Bank AG, climbed the daily cap of 10 percent to 14.51 yuan. The bank said yesterday that first-quarter profit surged 80 percent to 821.6 million yuan, helped by higher fee and interest income.

Banks are expected to report full year profit growth of 70%, benefiting from an economy that has expanded more than 10 percent for nine straight quarters. The nation's factory and property spending rose 24.3 percent in the first two months.

The growth comes even after the government raised interest rates to a nine-year high. The government also told lenders to set aside a record amount of deposits as reserves. The reserve ratio can be raised to curb credit growth and head off overheating in the economy. Higher interest rates helped slow economic growth to 10.6 percent in the first quarter from 11.2 percent in the fourth quarter of 2007.

Baoshan Iron & Steel Co led steel makers higher today.

Baoshan, the nation's biggest steel maker, increased 5.53 percent to 13.92 yuan. The company's first-quarter profit rose 16 percent to 4.26 billion yuan after the company raised prices to help cover higher raw-material costs.

Maanshan Iron & Steel Co, the company that is one of China's biggest producers of construction steel, jumped 7.37 percent to 7.14 yuan. It said yesterday that first-quarter profit rose 40 percent to 766.9 million yuan after it raised prices and shifted its product mix to cover higher costs.

Steel prices will remain high in the third quarter because of rising material costs, Baoshan President Fu Zhongzhe said in an online conference with investors today.

"Production costs won't fall in the third quarter, coal prices may even rise further and demand remains strong,'' Fu said. "China's steel prices will fluctuate within high levels in the third quarter.''

(Shanghai Daily April 30, 2008)