Chinese share prices closed sharply higher Wednesday with bargain hunting, ending two consecutive days of decline.

 

Analysts said the rebound also came after a report that the companies owned by the central government will not massively sell shares of their listed units.

 

The state-owned giants seek to provide share holders sustainable returns, Wednesday's Shanghai Securities News citing Li Rongrong, head of the State-owned Assets Supervision and Administration Commission, as saying. This helps allay fears that the giants will sell shares to lock in profits at the high price levels.

 

The benchmark Shanghai Composite Index, which covers both A and B shares, rose 105.61 points, or 2.18 percent, to finish at 4,941.78.

 

The Shenzhen Component Index on the smaller Shenzhen Stock Exchange climbed 312.90 points, or 1.95 percent, to 16,387.01.

 

The Hushen 300 Index, which accounts for 60 percent of the nation's stock market value, jumped 116.38 points, or 2.41 percent, to 4,946.29.

 

The rises in mainland share prices echoed advance in Hong Kong. The benchmark Hang Seng Index closed up 1.11 percent at 27,029.26 after modest gains on Wall Street overnight.

 

Winners led losers by 754 to 39 in Shanghai and by 562 to 35 in Shenzhen. The combined turnover of the two bourses expanded by a large margin to 125.71 billion yuan from 96.47 billion yuan in the previous session.

 

Lin Jian, an analyst with South China Securities, said the increase in turnover shows more investors are hunting bargains following the two-month-long correction.

 

Despite the rebound, the key index, which has risen 84.7 percent so far this year, was still 19.3 percent lower from its record high of 6,124.04 on Oct. 16.

 

The turnover, however, was not big enough to lead to continuous market gains, said Guangfa Securities.

 

Oil, steel, and nonferrous metals led the recovery. PetroChina, which accounts for nearly a quarter of the total weight of the benchmark index, added 1.20 percent to 29.59 yuan. Sinopec, the nation's largest oil refiner, jumped 2.76 percent to 21.57 yuan.

 

Steel stocks rose after earlier heavy losses and also amid expectation that supply of steel products will be tight in 2008 after the closing of many small out-dated steel plants, said analysts.

 

Baoshan Iron and Steel, China's largest steel producer, gained 4.74 percent to 16.79 yuan.

 

Stocks of nonferrous metals rose after Aluminum Corp of China Ltd, known as Chalco, raised spot price of oxide aluminum by 400 yuan to 4,200 yuan per tonne.

 

Chalco added 3.00 percent to 37.39 yuan and Baotou Aluminium Co. surged 6.28 percent to 52.12 yuan.

 

Financial and property stocks also posted strong gains after recent sell-off.

 

Heavyweights Industrial and Commercial Bank of China rose 2.34 percent to 7.88 yuan and China Life added 3.04 percent to 56.63 yuan.

 

Citic Securities, the nation's largest listed brokerage, gained 3.98 percent to 82.28 yuan.

 

Shanghai Lujiazui Finance and Trade Zone Development Co. was up 5.02 percent to 23.42 yuan.

 

(Xinhua News Agency December 20, 2007)