Index up as industrials continue rally

INDUSTRIAL stocks continued their rally in the morning session today, lifting Shanghai's share-price index higher.

Gold and copper producers led the rise, thanks to rising prices for the two metals.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, jumped 0.6 percent, or 32.14 points, to 5,352 at 11:30am today.

But losers in the Shanghai market outnumbered winners 502 to 277 and 68 were unchanged.

The Shenzhen Composite Index, which covers the smaller mainland stock market, was up 0.53 percent, or 7.95 points, to 1,502.58.

Zhongjin Gold, China's biggest publicly traded gold miner by market value, advanced 8.66 percent, or 10.87 yuan (US$1.50), to 136.45 yuan and Shandong Gold Mining Co, the second-largest, also surged 8.35 percent, or 16 yuan, to finish the session at 207.6 yuan.

Both stocks rose by the daily cap of 10 percent yesterday.

Gold futures rose 1.1 percent to a record close of US$869.10 in New York yesterday, on speculation rising commodity costs and a weakening dollar will boost demand for an inflation hedge.

Copper producers followed the rally this morning. Yunnan Copper, China's third-biggest producer of the metal, rose 9.56 percent, or 5.22 yuan, to 59.82 yuan. Jiangxi Copper Co, the second-biggest, gained 7.86 percent, or 4.04 yuan, to 55.43 yuan.

Copper contracts surged by the exchange-imposed 4 percent limit to 59,800 yuan a metric ton in Shanghai today as demand outstripped supply after overnight gains in prices on the London Metals Exchange and in other commodities.

PetroChina Co, the nation's biggest oil company, rose 0.97 percent, or 0.3 yuan, to 31.38, extending yesterday's 1.6 percent gain. Parent China National Petroleum Corp said it increased overseas crude output to a record 60.23 million metric tons last year.

Separately, PetroChina's Hong Kong-listed shares were upgraded to "buy" from "neutral," by analysts including Kelvin Kohl at Goldman, Sachs and Co.

Airlines recovered from yesterday's broad sell-off and edged up this morning.

Air China, the world's biggest airline by market value, was up 0.45 percent, or 0.13 yuan, to 29.22 yuan. China Eastern, the nation's third-largest carrier, added 0.77 percent, or 0.16 yuan, to 21 yuan.

China National Aviation Holding Co, parent of Air China and a 10 percent shareholder of China Eastern, said late yesterday it may offer to buy another 24 percent of China Eastern if shareholders reject Singapore Airlines' HK$7.16 billion (US$918 million) bid.

The proposed sale price of HK$3.80 a share does not reflect the fair value of China Eastern, state-owned China National Aviation said.

Opposition by state-owned China National Aviation may scuttle Singapore Airlines' purchase plan, which needs approval by two-thirds of minority shareholders on January 8.