China shares up 1.9% as Feb. data sparks rate-cut hopes

Special Report:Global Financial Crisis

BEIJING, March 10 (Chinese media) -- Chinese equities gained 1.88 percent Tuesday

as investors bet that the central bank might cut interest rates, following the

release of consumer and producer price figures for February that indicated

deflation pressure, dealers said.

The benchmark Shanghai Composite Index rose 39.82 points to 2,158.57. The

Shenzhen Component Index was up 1.24 percent, or 98.87 points, to 8,045.66.

Gains outnumbered losses 817 to 59 in Shanghai and 688 to 58 in Shenzhen.

Combined turnover shrank sharply to 106.53 billion yuan (15.57 billion U.S.

dollars), from 158.1 billion yuan on the previous trading day.

Wu Kongyin, an analyst with Guangdong-based Lianhe Securities, said the

shrinking turnover showed that investors were cautious ahead of further data

releases this week including fixed-asset investment (Wednesday) and retail sales

(Thursday).

The National Bureau of Statistics said the consumer price index fell 1.6

percent year-on-year in February, the first monthly decrease since December

2002.

The producer price index fell for a third straight month, dropping 4.5

percent year-on-year, but it was 1.2 percentage points higher than the

month-earlier level and better than investors forecast, showing signs of an

industrial recovery, dealers said.

Stocks fell 3.39 percent Monday on concerns about weak February data, and

the Shanghai Composite Index opened 1.02 percent lower Tuesday. But prices

rebounded during the afternoon as investors concluded that rate cuts were

possible.

Wang Qing, chief analyst for the Chinese economy with Morgan Stanley Asia,

forecast Tuesday that the central bank might cut interest rates by 27 basis

points within this month.

Leading shipper COSCO rose by the daily 10-percent limit to 10.76 yuan. The

Greek parliament last week approved COSCO to run facilities at the main port of

Piraeus. The deal with COSCO was signed in November.

Vanke, the largest real estate developer by market value, slid 1percent to

7.81 yuan. It announced Tuesday that its 2008 net profits dropped 16.7 percent

to 4.03 billion yuan.