Shanghai index climbs for fourth-straight day

SHANGHAI'S key stock index inched up for a fourth-consecutive day today. Financial shares jumped due to a stronger yuan while China Railway Group surged after it won a lucrative contract to construct part of a high-speed railway between Shanghai and Beijing.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, increased 0.59 percent, or 31.77 points, to 5,393.34 at 3pm today.

Winners in the Shanghai market outnumbered losers 619 to 156 and 72 were unchanged.

The Shenzhen Composite Index, which covers the smaller mainland stock market, rose 1.28 percent, or 19.36 points, to 1,528.

Shanghai Pudong Development Bank Co and China Vanke Co led financial stocks higher after the yuan rose to a record against the US dollar, spurring expectations of a surge in demand for yuan-priced assets.

Pudong Bank, the Chinese partner of Citigroup Inc, advanced 5.62 percent, or 2.98 yuan (41 US cents), to 55.99 yuan. China Vanke Co, the nation's biggest listed property developer, gained 3.21 percent, or 0.94 yuan, to close at 30.18 yuan.

The yuan strengthened as much as 0.14 percent to 7.2630 against the greenback today, the highest since it ended a link with the US currency in July 2005 on speculation the central bank will allow faster gains to cool the economy.

The People's Bank of China said on Friday it will take more steps this year to prevent the world's fastest-growing major economy from overheating. The yuan gained about seven percent last year as China sought to temper inflation and reduce a record trade surplus.

China Railway was the biggest winner after the government handed out 83.7-billion yuan in contracts for the Shanghai-Beijing high-speed railway. It received 40 percent of the project. The world's third-largest construction company surged 9.80 percent, or 0.96 yuan, to 12.39 yuan.

Coal makers also enjoyed a good day as coal prices gained as much as 4.1 percent in November from the previous month, the National Development and Reform Commission, China's top economic planning body, said in a statement posted on its Website

Datong Coal Industry Co, China's second-largest coal company by capacity, jumped 5.24 percent, or 1.75 yuan, to 35.14 yuan while China Shenhua Energy Co, the nation's largest coal producer, added 3.27 percent, or 2.15 yuan, to 67.91 yuan.

Parent Shenhua Group Corp's profit increased 16 percent last year to 29 billion yuan as rising energy demand in the world's fastest growing major economy drove sales of the fuel to a record.

The price of thermal coal climbed as much as 20 yuan to between 500 yuan and 510 yuan a metric ton at the end of November at Qinhuangdao, China's largest coal port, the statement said. Average coal prices and transport costs both gained as demand increased, it added.

Meanwhile, the rising yuan slightly lifted airlines today. But Air China, the world's biggest airline by market value, lost 1.03 percent, or 0.30 yuan, to 28.89 yuan after its parent said it would bid a higher price than Singapore Airlines Ltd for a stake in China Eastern, the nation's third-largest carrier.

China National Aviation Holding Co, the parent of Air China, yesterday said it will offer at least HK$5 (64 US cents) a share for a stake in China Eastern if shareholders vote against the Singapore Airlines deal tomorrow. Singapore Airlines and parent Temasek Holdings Pte agreed to buy a 24 percent stake in Shanghai-based China Eastern for HK$3.80 per share last year.

China Eastern remained unchanged when it closed at 20.63 yuan today.