China Stocks Gains; Zhongjin Gold, Commodity Shares Advance

China's stocks rose to the highest in more than two months. Metals shares including Zhongjin Gold Corp. advanced after commodities rose to records.

"The boom on commodities has provided investors an excuse for buying into metal shares, which are one of the market favorites now," said Lu Yizhen, who helps manage the equivalent of $640 million at Citic-Prudential Fund Management Co. in Shanghai.

China Eastern Airlines Corp. dropped after shareholders rejected a proposal to sell a stake to Singapore Airlines Ltd.

The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, gained 37.33, or 0.7 percent, to 5,565.38 at the 11:30 a.m. local-time break, set for its highest close since Nov. 1.

Zhongjin Gold, China's largest publicly traded gold miner by market value, rose 4.05 yuan, or 3 percent, to 138.20. Separately, the company yesterday said it won conditional approval from the China Securities Regulatory Commission to sell stock and buy assets.

Shandong Gold Mining Co., the second-largest, added 2.87 yuan, or 1.3 percent, to 222. Jiangxi Copper Co., China's second-biggest producer of the metal, advanced 2.22 yuan, or 3.9 percent, to 59.25. Tongling Nonferrous Metals Group Co., the country's biggest, gained 0.51 yuan, or 1.9 percent, to 27.74.

The UBS Bloomberg Constant Maturity Commodity Index rose as much as 2.5 percent to 1,334.71, a record high, on speculation that metals, energy and grains will outperform equity and bond markets this year. Copper surged to a seven-week high in New York and gold soared to a record.

Copper and zinc both jumped by the exchange-imposed 4 percent daily cap in Shanghai today.

China Eastern

China Eastern, the nation's third-largest carrier by fleet size, dropped 0.18 yuan, or 0.9 percent, to 20.45. Minority shareholders yesterday voted against selling a 24 percent stake to Singapore Air and its parent Temasek Holdings Pte for HK$7.16 billion ($918 million).

Air China Ltd.'s parent, holder of about 10 percent of China Eastern's minority shares, pledged to pay at least 32 percent more for the stake should the Singapore Air deal be rejected. Air China, the world's biggest airline by market value, fell 0.26 yuan, or 0.9 percent, to 28.

"The tussle around China Eastern should come to an end for the time being," said Citic-Prudential's Lu. "Investors are selling in belief Singapore Air isn't likely to raise the offer, diminishing the hope of a bidding war."

The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, added 0.2 percent to 5,397.52. The Shenzhen Composite Index rose 1.1 percent to 1,522.42.

Elsewhere, Xinjiang Ba Yi Iron & Steel Co., majority-held by Baosteel Group Corp., China's biggest steelmaker, jumped 1.70 yuan, or 8 percent, to 23. Ba Yi Steel said 2007 profit was 405.5 million yuan ($56 million), without giving comparative figures for 2006, as the data for last year were prepared under the new accounting standards.