SHARES in Shanghai may fluctuate between 2,500 and 2,680 this week as fears of inflationary pressure seem to be ebbing and this will help the key stock index consolidate its first weekly gain in one-and-a-half months that it made last week, according to analysts.

They said the market is not expected to slide sharply as inflationary expectations in China are weakening and the United States has delayed its decision on a third round of quantitative easing to mid-September.

The Shanghai Composite Index ended at 2,612.19 points last week, a rise of 3.1 percent from a week earlier.

"Market sentiment is improving," said Zhang Li, an analyst at Huatai Securities Co, last Saturday. "We forecast the stock market to be comparatively stable this week."

Zhang ruled out stocks from staging a strong rally in China because the United States economy continues to be feeble and the debt crisis in some European countries is expected to linger. The US economy grew at an annual rate of 1 percent this spring and 0.7 percent for the first six months.

US Federal Reserve Chairman Ben Bernanke did not reveal any details of the possible QE3 last Friday, and the postponement may help to stabilize the Chinese market and for it to avoid any sharp fluctuations this week, according to Qian Qimin, an analyst at Shenyin and Wanguo Securities Co, last Saturday.

Bernanke said the Fed would extend its September policy meeting to two days to consider its options.

Source:shanghaidaily