Rising 3 percent in the first two days of trading this week, the Shanghai stock market again climbed 0.97 percent yesterday to close at 5771.46, after breaking through the 5800-mark during the course of the day.

The benchmark Shanghai Composite Index opened 27 points higher and surged as much as 2.5 percent to 5860.86 around 2 pm, led by large-cap stocks in the financial sector. But the index was dragged down thereafter by heavy selling pressure. Losers outnumbered gainers by 564 to 274.

The turnover on the bourse amounted to 165.45 billion yuan as the average price-earnings ratio rose to 66.95.

The smaller Shenzhen Composite Index dropped 0.48 percent to close at 1543.79, and the Hang Seng Index rose 1.17 percent to close at 28556.9.

The number of new A-share accounts opened on Tuesday was 204,579, jumping from the average of 185,801 in the last week of September.

Investor confidence was boosted by the positive comments on China's capital market by Zhou Daojiong, former chairman of the China Securities Regulatory Commission, in yesterday's China Securities Journal.

Zhou said China's capital market was poised for a leap in the next five years and that the possibility of the market scale doubling in five years couldn't be ruled out.

"However, investors seemed more cautious and began to sell high-priced stocks when the index surged to a new high," said Wu Feng, an analyst at TX Investment Consulting Co Ltd. These included large-cap banking and real estate stocks.

"Besides, the upcoming macroeconomic data announcement for September is expected to raise investor worries about further tightening measures," he added.

The Industrial and Commercial Bank of China jumped 4.12 percent to close at 7.59 yuan. China Life dropped 1.32 percent to close at 67.09 yuan.

The country's largest coal producer, Shenhua Energy, surged to its daily limit to close at 76.23 yuan on its second day of trading in Shanghai.

Steel stocks led the rally yesterday. China's largest steelmaker Baosteel jumped 4.1 percent to close at 18.53 yuan while Jinan Iron and Steel soared 8.43 to 25.59 yuan.

(China Daily October 11, 2007)