China shares mixed; yuan hits new high

Updated: 2007-02-01 19:27

SHANGHAI - China shares ended mixed Thursday, as bargain-hunting offset concerns that regulators may take measures to cool high stock prices.

Meanwhile, a weaker dollar in global markets coupled with calls from the US Treasury for faster China exchange rate reforms pushed the yuan to a fresh high against the US dollar.

The benchmark Shanghai Composite Index edged down 0.03 percent to 2,785.43. The index declined 4.9 percent Wednesday in its biggest fall in nearly eight months, and dipped by as much as 2.9 percent during Thursday's session before recovering lost ground.

The Shenzhen Composite Index rose 0.6 percent to 659.33.

"Some investors returned to the market to scour for bargains, while others are still wondering whether the correction is over or not," said Zhu Haibin, an analyst at Everbright Securities.

China Minsheng Banking rose 2.3 percent to 12.29 yuan after sliding 9.3 percent Wednesday. CITIC Securities gained 2.3 percent to 35.77 yuan after falling 7.2 percent the day before.

Many shares still look expensive and profit-taking pressure remains high after China shares more than doubled last year, and investors remain worried over comments by regulators that suggest they may take measures to cool the stock market.

"All these signal that the regulators are concerned the strong rally in the stock market in the past months may lead to potential risks," said Ding Chaoyu, an analyst at Great Wall Securities.

Daqin Railway fell 5.2 percent to 9.99 yuan, as 454.5 million shares sold to institutional investors in its initial public offering started trading after a six-month lockup.

Hua Xia Bank dropped 2.7 percent to 9.96 yuan, after the company said its unaudited 2006 net profit rose 13 percent to 1.46 billion yuan (US$188 million; euro146 million), slower than a 27 percent jump in 2005.

In currency dealings, the US dollar was at 7.7583 yuan on the over-the-counter market at 0730 GMT, down from Wednesday's close of 7.7739.

Dollar offers rose after the official "parity rate" was set at a record low of 7.7615 yuan, traders said. But traders said the US unit may have dropped too far too fast against the yuan in the volatile session and could stabilize above 7.75 through Friday.

Bank of China was buying dollars around lunchtime, temporarily countering the US unit's decline, a Shanghai-based trader said.

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