China A-shares close higher; banks fall on policy tightening fears

China A-shares closed higher for a second day, continuing their recovery from a 12 pct slump earlier this week after rallies in the US and Hong Kong markets, dealers said.

Coal energy and agricultural stocks led the gains.

However, caution remained in the financial sector due to worries over further policy tightening after China reported strong inflation data.

CPI growth in December was 6.5 pct, with the index rising 4.8 pct in 2007. The National Bureau of Statistics added in comments accompanying the release of economic indicators today that upward pressure on prices is increasing.

The benchmark Shanghai Composite Index closed up 14.69 points or 0.31 pct at 4,717.73, extending a gain of 3.14 pct yesterday.

Turnover rose to 149.24 bln yuan from 140.35 in the previous session.

The Shanghai A-share Index rose 15.35 points or 0.31 pct to 4,951.35 and the Shenzhen A-share Index was up 28.10 points or 1.91 pct at 1,502.99.

The FTSE/Xinhua China A 50 Index was down 5.99 points at 18,302.67 and the FTSE/Xinhua China A 200 Index was up 108.94 points at 14,067.65.