Resources rally takes index higher

RESOURCES shares, including metals and gold, continued their second-day rally today thanks to rising prices for the two metals, boosting Shanghai's share-price index higher.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, jumped 0.78 percent, or 41.71 points, to close at 5,361.57 at 3pm today. The index was 96.57 points higher this week compared with 5,265 points when it resumed trading on Wednesday after a four-day break for the New Year's Day holiday.

But losers in the Shanghai market outnumbered winners 419 to 361 and 67 were unchanged.

The Shenzhen Composite Index, which covers the smaller mainland stock market, was up 0.94 percent, or 14.01 points, to 1,508.64.

Zhongjin Gold, China's biggest publicly traded gold miner by market value, and Shandong Gold Mining Co, the second-largest, both enjoyed a daily cap of 10 percent for a second day. Zhongjin surged 12.56 yuan (US$1.73), to 138.14 yuan and Shandong Gold rose 19.16 yuan to finish at 210.76 yuan.

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 today. Yunnan Copper, China's third-biggest producer of the metal, also jumped 10 percent, or 5.46 yuan, to 60.06 yuan. Jiangxi Copper Co, the second-biggest, gained 8.17 percent, or 4.2 yuan, to 55.59 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 and a key heavyweight in the market, rose 0.74 percent, or 0.23 yuan, to 31.31 yuan, 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.

The price of crude oil breached US$100 a barrel on Wednesday, the highest since the present trading regime began in 1983. But the price of light, sweet crude for February delivery fell 44 US cents to settle at US$99.18 a barrel on the New York Mercantile Exchange yesterday.

Most airlines gave back the morning's slight recovery gains in the afternoon.

Air China, the world's biggest airline by market value, was up 0.34 percent, or 0.1 yuan, to 29.19 yuan. China Eastern, the nation's third-largest carrier, retreated 1.01 percent, or 0.21 yuan, to 20.63 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 China National may scuttle Singapore Airlines' purchase plan, which needs approval by two-thirds of minority shareholders on January 8.

Elsewhere, Beijing Quanjude Group, which is famous for its roasted ducks, surged the daily cap of 10 percent for a third day today while Tsingtao Brewery Co, part-owned by Anheuser-Busch Co, added 3.40 percent, or 1.38 yuan, to 41.94 yuan. Tsingtao Brewery said it will pay 171 million yuan to buy out its partner in a mainland venture.