2010-08-17 11:04

SHANGHAI - Mainland stocks climbed, with the benchmark index gaining the most this month, as the nation's demand for resources highlighted the resilience of an economy that surpassed Japan as the world's second largest last quarter.

The Shanghai Composite Index rose 2.1 percent to close at 2661.71 on Monday, the biggest gain since July 28. China Cosco Holdings Co, the world's largest operator of dry-bulk ships, jumped by the 10 percent daily limit as steel mills revived iron ore imports. China Shenhua Energy Co, the nation's largest coal producer, rose 5.4 percent as the company stepped up output amid increasing power consumption.

"Investors are getting more confident about the economic outlook," said Dai Ming, a fund manager at Shanghai Kingsun Investment Management & Consulting Co. "There's a low possibility that China's economy will have a double-dip and a soft landing is very likely. That'll provide support for a continuing stocks rebound."

The Shanghai gauge has rallied 13 percent from this year's low on July 5 as investors speculated the government would ease property curbs and allow more lending to counter slowing growth. That's pared this year's loss to 19 percent, after the government increased down-payment requirements on home sales and ordered banks to set aside more deposits as reserves.

Related readings:  China 'overtakes Japan in economic prowess'  Asian stocks post weekly decline on growth concerns  Chinese stocks climb 2.11% Monday  Chinese stocks rebound more than 1.2% Friday

The Shanghai Composite Index gained 55.01 to 2661.71 on Monday. The CSI 300 Index advanced 2.3 percent to 2922.08, led by healthcare, energy and industrial companies.

Japan's nominal gross domestic product for the second quarter totaled $1.288 trillion, less than China's $1.337 trillion, the Japanese Cabinet Office said on Monday. Japan remained bigger in the first half of 2010, the government agency said.

China overtook the United States last year as the biggest automotive market and Germany as the largest exporter. The nation is the world's No 1 buyer of iron ore and copper and the second-biggest importer of crude oil, and has underpinned demand for exports by its Asian neighbors.

The Baltic Dry Index, a measure of commodity-shipping costs, rose for a seventh day on Aug 13 in London. China, the biggest buyer of iron ore, boosted imports of the mineral for the first time in four months in July as mills restocked depleted inventories.

"Investors are buying on the dip as shipping lines have been falling in the past year to really low levels," said Song Weiya, a Shenzhen-based analyst at Great Wall Securities Co. "Still, the magnitude of the jump today is surprising."

Energy producers advanced after the National Energy Administration said China's power consumption rose 14 percent in July from a year earlier. New-energy stocks climbed after the China Securities Journal reported the government may introduce a 10-year development plan for the alternative energy industry at the end of next month.