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China shares reverse loss to close up 0.5%

(Xinhua)
Updated: 2008-12-16 18:15

Chinese stocks ended 0.54 percent higher on Tuesday, reversing earlier losses as investors weighed the grim economic outlook and possible further government efforts to spur growth.

Related readings:  Central SOEs see profits drop by 26% in first 11 months  Shares drop 1.78% in morning trade on dampened economic prospect  China's industrial output growth hits record low  China seeks to stabilize capital market to buoy economy

The benchmark Shanghai Composite Index edged up 10.63 points, or 0.54 percent, to 1,975.01, extending a 0.52 percent gain on Monday.

The index slumped as much as 2.9 percent in morning trade as investors cut holdings. Economic data for November showed further downside risk for the economy.

Industrial output rose 5.4 percent annually in November, the lowest since January 2001, the National Bureau of Statistics (NBS) announced on Monday.

Annual urban fixed asset investment was up 26.8 percent in November, 0.4 percentage points lower than January-October period but unchanged from a year earlier, the NBS said on Tuesday.

State-owned enterprises (SOEs) directly under the central government reported a sharp profit decline of 26 percent to 683 billion yuan ($99.71 billion) in the first 11 months this year, figures released Monday showed.

But many investors expected the government to unveil more specific measures to avert an economic slump, said analysts.

The State Council on Saturday said it planned to increase liquidity and encourage banks to extend more loans to help businesses, including the small and medium-sized companies.

The cabinet also called for the quick establishment of a multi-tiered capital market to energize the financing channels and increase fiscal and taxation support.

The Shenzhen Component Index on the nation's smaller stock exchange gained 148.90 points, or 2.10 percent, to 7,250.32.

Gainers outnumbered losers by 602 to 234 in Shanghai and by 596 to 121 in Shenzhen. Combined turnover was 80.5 billion yuan, slightly lower than Monday's 81.9 billion yuan.

Predictions of more rate cuts boosted property stocks while hitting banks shares, said Wan Bing, a Guangfa Securities analyst.

The property sector led the advance, adding 4.2 percent as more monetary easing, including lending rate cuts, could spur home purchases.

China Vanke, the country's largest listed real estate firm, rose 5.28 percent to 7.58 yuan. Poly Real Estate Group Co jumped 7.25 percent to 18.34 yuan and Gemdale Corp added 5.87 percent to 8.29 yuan.

Most banks slid as corporate profits continue to fall in the face pf worsening economic conditions.

Industrial and Commercial Bank of China slipped 0.26 percent to 3.79 yuan. China Construction Bank dropped 0.96 percent to 4.14 yuan and China Citic Bank dropped 1.45 percent to 4.09 yuan.