Mainland stocks drive index to 3-month high

SHANGHAI - Stocks on the Chinese mainland climbed, driving the benchmark index to a three-month high, as oil producers gained on higher prices and technology shares rose.

ZTE Corp surged 10 percent on Monday, leading advances for telecom companies. China Petroleum & Chemical Corp climbed 1.42 percent after China boosted retail gasoline and diesel prices for the first time this year. Industrial and Commercial Bank of China Ltd (ICBC) dropped the most in three weeks.

The Shanghai Composite Index surged 1.12 percent to 2932.25 at the 3 pm close on Monday.

The CSI 300 Index rose 1.43 percent to 3257.91.

Fiberhome Telecommunication Technologies Co surged 8.72 percent to 42 yuan ($6.4). Tsinghua Tongfang Co rose 4.3 percent to 27.90 yuan.

PetroChina Co rose 1.12 percent to 11.71 yuan.

ICBC slid 0.69 percent to 4.30 yuan.

Bank of China Ltd lost 0.3 percent to 3.27 yuan.

"We wouldn't advise buying equities until we're clear of signs of inflationary pressure and that probably won't happen until the second half," said Garry Evans, a strategist at HSBC Holdings Plc in Hong Kong. "We have been pretty cautious on Chinese equities for a year now and we still think there is a risk of more increases in reserve requirements and interest rates."

Changsha Zoomlion Heavy Industry Science and Technology Development Co, China's second-biggest maker of construction equipment, climbed 2.54 percent to 14.94 yuan. The company said it plans to invest 100 million yuan to set up an insurance company whose size is tentatively set at 1.15 billion yuan in Hunan province.

China State Construction Engineering Corp, the nation's largest housing contractor, rose 1.37 percent to 3.71 yuan. The company said it signed 42.8 billion yuan of new construction contracts in January, an increase of 81.4 percent compared with a year earlier.

Shanxi Taigang Stainless Steel Co, China's biggest producer of the rust-proof metal, added 1.03 percent to 5.88 yuan after saying it will set up a unit for making specialty steel used in machinery and railways.

ZTE Corp surged the most since November 2008, gaining 10 percent to 31.42 yuan. ZTE led telecommunication companies higher on speculation that the government will announce measures to boost the industry. "The government's support will boost earnings in the industry," said Zhang Tao, an analyst at Shanghai Securities Co.

Bloomberg News

(China Daily 02/22/2011 page17)