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Steel shares push China's key index to new high
Last Updated(Beijing Time):2007-05-11 10:30
Demand for safe stocks in China's strengthening steel industry kept up the rise in China's share markets on Thursday.

Analysts said more investors were snapping up steel stocks with lower price/earnings (P/E) ratios, but with better profit prospects out of fear of more market fluctuations.

The benchmark Shanghai Composite Index, which covers both A and B shares, closed up 0.91 percent, or 36.62 points, to 4,049.70 points on a turnover of 207.7 billion yuan.

The Component Index on the smaller Shenzhen Stock Exchange edged up 0.49 percent, or 56.41 points, to 11,574.16 points on a turnover of 100.7 billion yuan.

Baosteel, the country's largest steel producer, gained 6.01 percent to 12.70 yuan, and Ma'anshan Iron and Steel added 9.86 percent to 9.47 yuan.

The combined net income of 99 large-and medium-sized steel plants in China soared 282 percent to 34.5 billion yuan in the first quarter of the year, according to the China Iron and Steel Association.

Banks started to lose growth momentum, with the Industrial and Commercial Bank of China sliding 0.17 percent to 5.77 yuan.

Analysts said more volatility was expected in the near future as profit taking pressure was building after the key Shanghai index breached the 4,000-point mark on Wednesday.

The heavy inflow of funds, strong corporate profits, and double-digit economic growth have helped to drive up the key Shanghai index by more than51 percent this year after it soared 130 percent last year.

Xu Ming, an analyst at Shenyin Wanguo Securities, said only small corrections were expected when taking account of the heavy flow of investor cash into the equity markets.

In the first quarter, 4.78 million stock accounts were opened in China and in April alone, another 4.5 million new accounts were set up.

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