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Shares sharply higher in morning trade after Wall Street rally
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Chinese shares surged sharply in morning trade on Monday following a rally on the Wall Street and news of improving weather in the country's snow-hit regions.

The benchmark Shanghai Composite Index rose 269.35 points, or 6.23 percent, to close at 4,590.12 points in the morning session. On last Friday, the index lost 1.43 percent to 4,320.77, the lowest closing in six months.

The Shenzhen Component Index ended up 1,063.88 points, or 6.74 percent, to 16,840.75.

Only two losses were registered in the two bourses that saw aggregate turnover shrink to 89.1 billion yuan from the whole-day 140.1 billion yuan on the previous close.

Wall Street rallied last week with the Dow Jones Industrial Average gaining more than 0.7 percent on Friday. Microsoft Corp.'s bid for Internet provider Yahoo Inc. and a possible rescue plan for the troubled bond insurance sector helped relieve investor worries in the sliding U.S. economy. The index gained more than four percent for the week, its biggest increase since March 2003.

The worst snowstorms in five decades that have plagued China's central, southern and eastern regions added gloom to local markets that had fallen earlier amid lingering concerns over a U.S. recession.

The snow-hit regions could see intermittent snow and rain this week, said the Central Meteorological Station on Monday.

Other Asian stock markets climbed on Monday on improved market sentiment after the Wall Street rally. Japanese shares surged 2.48 percent in morning trade on the Tokyo Stock Exchange, while in Hong Kong, the blue chip Hang Seng Index rose nearly four percent.

Heavy weights also surged. Chinalco (Aluminum Corporation of China Ltd.), the largest aluminum company in the country, rose by the daily 10 percent limit. The rise came after it teamed up with U.S. aluminum giant Alcoa to buy a 12 percent stake in the London-listed Anglo-Australian miner Rio Tinto. Sinopec rose 6.51 percent while China Ping An was up 6.26 percent.

The banking sector rose more than eight percent. Shanghai Pudong Development Bank Co., Ltd. climbed 9.97 percent while China Merchants Bank was up 8.96 percent.

Coal stocks rose on supply shortages caused by the heavy snow that has disrupted transport and increased demand. China Coal Energy Co. Ltd. rose 7.79 percent while Shanghai Datun Energy Resources Co. Ltd. was up 9.63 percent.

Analysts said the rise was also boosted by the approval of two new closed-end stock funds by China Securities Regulatory Commission (CSRC). Their introduction ended a five-month freeze on new funds in an effort to break the fall of domestic equities.

CCB Principal Asset Management Co. and China Southern Fund Management Co. together would raise about 14 billion yuan (1.95 billion U.S. dollars) after the Spring Festival, which starts on Thursday.

The CSRC suspended the launch of new funds late last year in reaction to the surging domestic stock market. The Shanghai Composite Index nearly doubled last year.

But the benchmark index dipped to 4,320.77 points on Friday, nearly 30 percent off its mid-October record high. Investors sold holdings due to concerns over a possible U.S. recession.

The domestic market has experienced volatile trading in recent weeks, with shares sinking more than seven percent on Jan. 22, the largest percentage loss in 7.5 months.

More than 60 percent of the investment funds in China had losses in the fourth quarter that totaled 72.1 billion yuan. Figures from TX Investment Consulting Co. indicated that 215 funds managed by 58 companies disclosed losses in their fourth-quarter reports. These losses were the first for Chinese funds as a whole since the end of June 2005 when the stock market began a bull run.

In currencies, the central parity of RMB against U.S. dollar was 7.1923 yuan to one dollar, according to China Foreign Exchange Trading System. It had hit a new high to a central parity rate of 7.1853 yuan to one dollar last Thursday, following an overnight key interest rate cut in the United States.

(Xinhua News Agency February 4, 2008)

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