SHARES in Shanghai inched up yesterday with the rebound of blue-chip stocks such as banks, ending an eight-day decline.

The benchmark Shanghai Composite Index closed up 5.3 points, or 0.18 percent, at 2,874.10 yesterday, off an intraday high of 2,917.81. The key index rebounded from an intraday low of 2,811.72, with the daily fluctuation sitting at 3.7 percent.

Decliners outnumbered gainers 617 to 163, and 73 companies recorded no change. Turnover sat at 43.22 billion yuan (US$6.26 billion).

Industrial & Commercial Bank of China, China's biggest bank, rose 1.97 percent to 5.18 yuan. China Merchants Bank increased 3.86 percent to 24.22 yuan.

"Blue chips helped the market to rebound despite a slide in the morning session trade," said Wan Bin, a GF Securities Co analyst. "Banks were among the strong performers among the blue chips."

The National Development and Reform Commission said on Sunday China will ease price controls on oil and gas products "at an appropriate time." In a statement explaining the newly issued Energy Conservation Law, the top economic planning body said it will also modify the power price mechanism.

The comments gave a shot in the arm to PetroChina and Sinopec as investors are seeking higher returns with future price changes, Wan said.

PetroChina, China's biggest oil company, gained 2.6 percent to 15.38 yuan and China Petroleum and Chemical Corp, known as Sinopec, climbed 6.64 percent to 11.89 yuan.

Wan said the market risk is fully exposed with a weekly index drop of 13.84 percent last week.

Some institutions are taking a more cautious attitude. "The middle-term market is still sluggish although some technical rebound may happen," said Shenyin & Wanguo Securities Co. "Investors better sit on the sidelines, watch more and act less."