Chinese stock markets closed higher on Friday, a day that marked the seventh anniversary of the beginning of the last bull market cycle from 1999 to 2001.

The gains came after three volatile trading days triggered by falling prices of commodities on the international market and falls of stock markets in neighboring countries.

The Composite Stock Index on the Shanghai Stock Exchange, which comprises yuan-denominated A shares and foreign-currency B shares, closed at 1,659.55 points, up 42 points, or 2.61 percent with turnover totaled 41.6 billion yuan (US$5.2 billion). It opened Friday's trading at 1,620.21 points.

The index hit 2,245 in 2001, a record high in the 16 years of stock markets in new China, followed by five year bear markets until late 2005, although the country's economy has been growing at about 10 percent annually since 1978.

The major index of Shenzhen Stock Exchange, the Shenzhen Component Index, was up 73.33 points, or 1.71 percent to close at 4,369.40 points on Friday, with a total turnover of 23.7 billion yuan.

The share prices of bellwethers Sinopec and G Baosteel rose by 4 percent, which helped stabilize the markets with improved market sentiment and pushed up the major indices.

Wan Bing, an analyst with Guangfa Securities Co., said the downward trend triggered by negative factors at home and abroad is coming to an end.

The Chinese stock markets rose to their highest points in more than 18 months earlier this week with the Shanghai Composite Stock Index at 1,678 points on Tuesday.

The index was 998 points on June 6, 2005 and it has jumped by about 60 percent since then.

Analysts said the markets would be fluctuating in the short run and are likely go up as the markets are now at the beginning of another bull market cycle.

Prices of about 100 shares, out of the country's 1,370 domestically listed firms, have doubled in the past nine months, with prices of several commodity shares up three to seven times.

China is expected to resume initial public offerings (IPOs) in the near future as similar legal framework for IPOs was put in place on Thursday.

China suspended IPOs a year ago for the ongoing State share reform to overhaul the capital market.

Poor corporate governance and the country's flawed legal framework for capital market, irregularities by listed firms and controlling share holders and loose supervision have been blamed for the bear market.

After over a year's efforts, China has improved its Securities Law and Corporate Law and launched an unprecedented state share reform to make the dominant non-tradable State shares, about two thirds of the total, tradable to bring the system in line with international practices.

Qin Hong, an analyst with Jiangsu Tianding Securities Co., said that the coming IPOs will bring quality firms with attractive values to the Chinese markets step by step, adding new blood to expand the scale and improve the value of the markets, which should be viewed as favorable factors in the long run.

(Xinhua News Agency?May 20, 2006)