Shares surge as govt vows to cut excess flab

Chinese mainland stocks rose, extending a weekly gain, as coal and steel producers advanced after the government pledged to further cut overcapacity and excess labor in those industries.

The Shanghai Composite Index climbed 0.8 percent to 2,938.52 at the close. Angang Steel Co and Shanxi Lu'an Environmental Energy Development Co jumped more than 6 percent as policy makers unveiled details of supply side reforms, including targeting further reductions in crude steel production capacity by as much as 150 million tons and "large scale" cutbacks in coal output. The offshore yuan rose and benchmark money-market rates fell. Hong Kong's Hang Seng China Enterprises Index advanced 0.8 percent.

"These measures will probably help the industries saddled with overcapacity to regain a balance in terms of supply and demand," said Wei Wei, an analyst at Huaxi Securities Co in Shanghai. "Without supply-side reforms, prices and profitability in these sectors will probably worsen. But now I see better prospects for them."