SHANGHAI'S key stock index yesterday made its biggest daily jump in 10 months on strong earnings reports and other gains in Asia.

The Shanghai Composite Index surged 2.9 percent, the most since October 15, to 2,615.26 points.

Asian markets rose yesterday, taking their cue from a strong overnight US market after fears of another recession eased following a surprising increase of orders. Hong Kong's Hang Seng Index rose 1.5 percent to 19,752.48, while Japan's Nikkei 225 gained 1.5 percent.

Wen Lijun, an analyst with Nanjing Securities, said: "China's stock market rose after growth in European and US shares eased concerns about a negative outlook for the world's economy. Heavyweights are outperforming their low valuation, which is likely to sustain a short-term rebound."

But she warned that economic uncertainties and continuing rising prices in China still threaten the market, and recommended consumer-related shares.

Banks rose after the Bank of China, the country's third-largest, reported profits in the first half jumped 28 percent as loan and fee income climbed. The bank's shares rose 2.4 percent to 3.02 yuan (US$0.47).

Everbright Securities surged 6.8 percent, leading a jump in brokerages, after it said first-half profits were 36.3 percent higher than a year earlier.

Tianjin Capital Environmental Protection Group led a rally in the environment sector after Shanghai Securities News reported China plans to spend over 2.3 trillion yuan on new subway lines and sewerage. Its shares surged 10 percent to 6.16 yuan.

Gold-related shares slumped after the gold price shed 5.6 percent to US$1,757.30 an ounce in New York on Wednesday. Lao Feng Xiang, a major jewelry retailer in China, lost 2.4 percent to 34.84 yuan. Shandong Gold Mining slid 1.4 percent to 48.17 yuan.

Source:shanghaidaily