China's shares hit new record for second straight day

Updated: 2007-07-31 20:06

SHANGHAI _ China's shares rose to a new record on Tuesday for a second straight day, propelled by power and steel stocks as banks were hurt by government efforts to curb lending.

The benchmark Shanghai Composite Index ended up 0.7 percent at 4,471.03, surpassing the high of 4,440.77 set Monday. The Shenzhen Composite Index for China's smaller second market rose 1.3 percent to 1,291.31.

Prices have risen sharply over the past week on investor expectations of strong corporate earnings amid a boom that saw China's economy expand by 11.9 percent last quarter. The Shanghai index has risen more than 60 percent this year after more than doubling in 2006.

"I expect the Shanghai index to test the next psychological resistance level of 4,500 soon," said analyst Qian Qimin at Shenyin Wanguo Securities.

Power company Guangzhou Development Industry Holdings surged by the 10 percent daily limit after reporting its first half profit was up 68 percent from the year-earlier period.

Laiwu Steel rose 3.8 percent, while Xinxing Ductile Iron Pipes gained 3.3 percent.

Banks fell after the government tightened credit Monday in an effort to cool the white-hot economy, increasing the amount of money commercial lenders must set aside as reserves for a sixth time this year.

Bank of China, the country's second-biggest lender, fell 0.7 percent, while smaller China Citic Bank shed 3 percent and Shanghai Pudong Development Bank ended down 2 percent.

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