Commodity stocks lift Shanghai index higher

RISING commodity shares today pushed Shanghai's key stock index higher as gold and copper prices rose to records.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, added 0.91 percent, or 49.28 points, to 5,435.81 at 3pm today.

Gainers in the Shanghai market outnumbered losers 745 to 44 and 59 were unchanged.

The Shenzhen Composite Index, which covers the smaller mainland stock market, was up 2.26 percent, or 34.07 points, to 1,539.63.

Zhongjin Gold, the largest publicly traded gold miner by market value in China, jumped 3.58 percent, or 4.80 yuan (66 US cents), to 138.95 yuan. Shandong Gold Mining Co, the nation's second-largest gold miner, added 3.75 percent, or 8.22 yuan, to 227.35 yuan.

Zhongjin yesterday said it won conditional approval from the China Securities Regulatory Commission to sell stock and buy assets.

Gold futures surged by as much as 10 percent, the daily maximum, when opening on the first day of trading on the Shanghai Futures Exchange this morning.

The rise in the futures market may lead to a surge among gold producers in Shanghai's stock market, Sun Zhaoxue, chairman of the China Gold Association, said today at the gold futures debut ceremony.

Jiangxi Copper Co, China's second-biggest producer of the metal, rose 5.19 percent, or 2.96 yuan, to 59.99 yuan.

Copper surged to a seven-week high in New York and gold also soared to a record. An ounce of gold for February delivery climbed as high as US$884 in New York yesterday, topping by almost US$10 its previous record of US$875 set in 1980. It later settled at US$880.30, up US$18.30.

Xinjiang Ba Yi Iron & Steel Co., majority held by China's biggest steel maker Baosteel Group Corp, jumped the 10 percent daily cap, or 2.13 yuan, to 23.43 yuan. Ba Yi Steel said 2007 profit was 405.5 million yuan, without giving comparative figures for 2006. The data for last year was prepared under new accounting standards.

Airlines showed a mixed performance today as investors are still cautious after shareholders of Shanghai-based China Eastern Airlines vetoed Singapore Airlines Ltd's bid for a 24 percent stake in the carrier for HK$7.16 billion (US$918 million) yesterday. The rejection clears the way for Air China Ltd's parent to make a higher offer.

Air China, the world's biggest airline by market value, recovered from morning losses and gained 0.71 percent, or 0.20 yuan, to close at 28.46 yuan. China Eastern, the nation's third-largest carrier by fleet size, shed 1.75 percent, or 0.36 yuan, to 20.27 yuan.

Singapore Airlines and parent Temasek Holdings Pte agreed to buy 24 percent of China Eastern to gain a base in China, the world's second-largest aviation market. But China National Aviation, Air China Ltd's parent, holder of about 10 percent of China Eastern, said on January 6 that it would make a counter-bid of at least HK$5 per share if the Singapore deal is rejected. China Eastern planned to sell new shares to its parent and the Singaporean investors at HK$3.80 apiece.