Stocks rise sharply on reports of new stimulus

Special Report:Global Financial Crisis

BEIJING, Feb. 4 -- Chinese shares ended sharply

higheron Tuesdaywith broad rallies in blue chips like bank and non-ferrous metal

stocks, while reports on pending policies to bolster the equipment manufacturing

and textile industries steered a burst of cash into the market.

The benchmark Shanghai Composite Index surged 49.13

points, or 2.44 percent, to finish at 2060.81, the highest since Dec 12. And the

Shenzhen Component Index rose 2.52 percent to 7266.41 points.

Advanced stocks on the two bourses far outnumbered losers

by 1,606 to 88 on Tuesday, and the active trading also extended the

combined turnover to 147.5 billion yuan, up 55.8 percent from the day before.

"The recovery of the key domestic economic figures

from the measures of money supply M2 and M1 to the Purchasing Managers' Index

indicated the improvement of the fundamentals, despite the magnitude of the

growth remaining mild," said Zhang Fan, an analyst with Tebon Securities.

"Figures from other large economies like the United

States looked even worse, which have inspired Chinese investors' confidence that

the country will recover earlier from the global financial woes," Zhang added.

Banking stocks picked up steam to rise 2.54 percent

overall, led by Hua Xia Bank with 6.04 percent gains to end at 8.78 yuan. The

Industrial and Commercial Bank of China ended up 1.91 percent to 3.73 yuan.

All non-ferrous metal shares rallied. A statement from

Rio Tinto on Monday saying that China's largest aluminum producer Aluminum Corp

of China (Chinalco) will inject 15 billion U.S. dollarsinto the company to alleviate

Rio's huge debt sent shares of Chinalco to its daily limit of 10.03 percent

Tuesday.

Good news also appeared from the policy front. A

proposal to revive the equipment manufacturing and textile industries has been

finalized, and would be sent to the State Council for discussion today,

according to Shanghai Securities News, citing an anonymous person close to the

matter.

Media reported recently that the central government

is proposing another investment plan worth 130 billion yuan to stimulate six

areas including the construction of affordable houses and infrastructure, and

key projects in health and education, following a newly added 100 billion yuan

investment in the fourth quarter of 2008.

(Source: China Daily)