Shanghai index steady at noon

SHANGHAI'S share-price index was almost unchanged after the early session today, the first day after a four-day trading suspension for the New Year's Day holiday.

Shares fluctuated through the morning with financial stocks losing ground on concerns the central bank will take measures to slow economic growth and curb liquidity.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, edged down 0.01 percent, or 0.68 points, to 5,260.88 at 11:30am today. The index opened at 5,265 points, 3.44 points lower that it closed at 5,261.56 last Friday.

Winners in the Shanghai market outnumbered losers 651 to 108 and 87 were unchanged.

The Shenzhen Composite Index, which covers the smaller mainland stock market, was up 1.18 percent, or 17.13 points, to 1,464.16.

Securities stocks were weak in the morning after the governor of the central bank said more belt-tightening policy may be on the way.

China's central bank reiterated its pledge to maintain a "tight'' monetary policy in 2008, continuing to use "balanced'' measures to manage the economy, said Zhou Xiaochuan, the governor of the People's Bank of China, in a New Year message on the bank's Website on Saturday. The bank will further control liquidity, Zhou added.

Citic Securities, China's biggest publicly traded brokerage, retreated 3.1 percent, or 2.77 yuan (38 US cents), to 86.5 yuan while Haitong Securities also shed 2.49 percent, or 1.37 yuan, to finish the early session at 53.55 yuan.

But some lenders and developers shrugged off the prospect of more tightening policies thanks to a strong yuan in the market today.

Minsheng Bank, the nation's only listed private bank, gained 1.69 percent, or 0.25 yuan, to 15.07 yuan. Industrial Bank Co also added 0.39 percent, or 0.2 yuan, to 52.06 yuan.

China Merchants China Direct Investments, a closed-end fund that trades on the Hong Kong stock market, on Friday said it will seek shareholder approval to sell all its 84 million shares in Industrial Bank Co.

But Industrial and Commercial Bank of China, the nation's biggest lender, lost 0.74 percent, or 0.06 yuan.

China's possible tight monetary policy this year sent the yuan to reach its strongest since a peg to the US dollar was scrapped in July 2005.

The yuan rose 0.12 percent to 7.2950 to the dollar at 10:40am in Shanghai, the strongest since July 2005, according to the China Foreign Exchange Trade System. The currency gained 7 percent last year as the country's policy makers sought to curb inflation and reduce a record trade surplus.

The strong yuan also helped airlines to surge in the morning as an appreciating local currency cuts the repatriated value of airlines' foreign currency denominated debts.

Air China, the world's biggest airline by market value, gained 7.14 percent, or 1.96 yuan, to 29.4 yuan and China Eastern, the nation's third-largest carrier, jumped 2.82 percent, or 0.6 yuan, to 21.86 yuan.

China National Aviation Holding Co, the parent of Air China, yesterday said the price offered by China Eastern to Singapore Airlines was inadequate and asked both companies to renew talks. China National holds about 10 percent of China Eastern's minority shareholding.

Industrial shares performed poorly in the early session today.

China Petroleum and Chemical Corp, Asia's biggest oil refiner, also known as Sinopec, lost 1.41 percent, or 0.33 yuan, to close the session at 23.1 yuan while PetroChina, the nation's biggest oil producer and a key heavyweight in the market, was down 1.36 percent, or 0.42 yuan, to 30.54 yuan.

Sinopec said last Friday it will buy 3.66 billion yuan of assets and gas station operation rights from its parent to expand its refined
oil retail network.

But China Cosco Holdings Ltd, Asia's biggest container-shipping line, gained 1.62 percent, or 0.69 yuan, to 43.35 yuan. The company said on Saturday that it's ordering 16 ships for US$1.08 billion to meet rising demand.