The benchmark Shanghai Composite Index finished 2.20 percent higher at 4,440.76 points, breaking the 4,400 mark for the first time. The Shenzhen Composite Index rose 2.28 percent to 1,274.92.

An investor monitors stock price movements at a brokerage in Changchun, Northeast China's Jilin Province July 26, 2007. [newsphoto]

The Shanghai index has gained 13.50 percent since July 19. It was a sharp contrast from the performances of other markets around the world.

In the United States, the Dow Jones Industrial Average lost more than 585 points, or 4.23 percent last week due to mounting concerns on the credit market, prompting drops in Japan, Europe and other markets.

But this was not the case in China. Analysts say this indicates the Chinese equity market is relatively isolated.

In the Chinese market, steel shares were big players, with Bengang Steel Plate Co. jumping its 10 percent daily limit to close at 13.92 yuan per share. Angang New Steel Company followed with a 9.86 percent growth to 24.39 yuan.

Property shares were also strong. China Vanke, the country's largest publicly traded property developer, soared 4.36 percent to 28.49 yuan.

Financials also contributed to pushing the index up. China Life went up 3.21 percent to 48.51 yuan, while Industrial and Commercial Bank of China increased 1.06 percent to 5.73 yuan.

Trading volume on the Shanghai Stock Exchange expanded to 153.51 billion yuan from 139.2 billion yuan on the previous session, as turnover on the Shenzhen Stock Exchange went up to 84.10 billion yuan from Friday's 75.90 billion yuan.

The market will set a series of new highs in the later half of this year on robust economic growth, strong corporate earnings and an ample supply of money, the China Construction Bank said in a report.

China Merchants Securities agrees, citing the faster pace of appreciation in the value of the Chinese currency, the upcoming Beijing Olympics and regaining confidence among investors.

The China Construction Bank report foresaw wilder fluctuations in the market due to pressure from macro-economic control, increasing supply of stocks and the potential launch of the stock index futures.

China's central bank might increase interest rates again and demand commercial banks to set aside more money as reserve before the end of this year, according to the report.