By Claire Zhang
SHANGHAI, Feb 11 (Reuters) - China's main stock index fell in hectic trade on Wednesday, dragged down by weak bank shares, as investors took profits from this year's 24 percent rally.
But most stocks rose, and the Chinese market once again outperformed foreign markets because of hopes for an economic recovery and fresh government aid to industries.
The Shanghai Composite Index dropped as low as 2,218.297 points but ended the morning down only 0.56 percent at 2,252.413.
It fared much better than Hong Kong's Hang Seng Index, which was down more than 3 percent on disappointment over the latest U.S. financial rescue plans.
Turnover in Shanghai A shares rose to a huge 81.3 billion yuan ($11.9 billion) from Tuesday morning's 70.3 billion yuan, while gaining Shanghai A shares outnumbered losers by 530 to 383.
After strong January loan data, the market is still hoping economic growth will start rebounding in the next few months, and speculation about more industrial stimulus policies is continuing to draw fresh money into stocks.
Banks continued to underperform, partly out of concern that a surge in their lending due to government pressure might increase their bad loans. The biggest banks, Industrial & Commercial Bank of China, lost 1.02 percent to 3.90 yuan.
But many other stocks were bought after the Shanghai Securities News and 21st Century Business Herald quoted unnamed sources as saying China would soon announce steps to help light industry, with the goal of boosting domestic consumption and moving the sector up the value chain over the next three years.
The government would cut consumption taxes on alcohol, cosmetics, jewellery and watches, raise import tariffs on luxury consumer goods, and lift export tax refunds on products such as home appliances and furniture, the newspapers said. The threshold at which individuals start paying income tax might be raised.
'The market will remain quite strong for a couple of weeks, though after the recent rally, consolidations may occur at any time,' said Zhang Yanbing, an analyst at Zheshang Securities.
During the midday break, the government announced weaker-than-expected January trade data; exports fell 17.5 percent from a year earlier, compared to economists' forecasts of a 10.8 percent drop.
But the figures were distorted by a long Lunar New Year holiday which occurred in January 2009 but in February 2008, so they may have little impact on the market.
Non-ferrous metals shares stayed strong despite a pull-back in copper prices. Jiangxi Copper rose 1.03 percent to 18.60 yuan.
Aluminum Corp of China (Chalco), playing catch-up after being suspended for a day during which it denied talk of a change in senior management, jumped 6.90 percent to 10.22 yuan.
Beijing Capital Tourism climbed 4.18 percent to 18.20 yuan, and has now gained 69 percent this month. Traders linked the surge to local media reports that Beijing was gearing up to build a movie theme park.
Guizhou Guihang Automotive raced up its 10 percent daily limit to 10.01 yuan, after being suspended since the end of last year. It said it planned to issue up to 110 million shares at 8.03 yuan each to group companies to buy aerospace assets.
($1 = 6.83 Yuan)
(Editing by Andrew Torchia)
((junjie.zhang@thomsonreuters.com; (8621) 6104-1775; Reuters
Messaging: junjie.zhang.reuters.com@reuters.net))) Hong Kong report Taiwan report Shanghai indices Shenzhen indices Hong Kong indices H-share index Red share index SPEED GUIDES RELATED NEWS AND OTHER TOPICS China news All equity news Greater China news Chinese summary Hong Kong news Chinese hot stocks Taiwan news China IPOs Chinese diary Hong Kong IPOs Press digests Keywords: MARKETS CHINA STOCKS MIDDAY (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra : visit http://topnews.session.rservices.com * BridgeStation: view story .134 * Reuters Plus: from your WebDSS screen For more information on Top News, visit http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
SHANGHAI, Feb 11 (Reuters) - China's main stock index fell in hectic trade on Wednesday, dragged down by weak bank shares, as investors took profits from this year's 24 percent rally.
But most stocks rose, and the Chinese market once again outperformed foreign markets because of hopes for an economic recovery and fresh government aid to industries.
The Shanghai Composite Index dropped as low as 2,218.297 points but ended the morning down only 0.56 percent at 2,252.413.
It fared much better than Hong Kong's Hang Seng Index, which was down more than 3 percent on disappointment over the latest U.S. financial rescue plans.
Turnover in Shanghai A shares rose to a huge 81.3 billion yuan ($11.9 billion) from Tuesday morning's 70.3 billion yuan, while gaining Shanghai A shares outnumbered losers by 530 to 383.
After strong January loan data, the market is still hoping economic growth will start rebounding in the next few months, and speculation about more industrial stimulus policies is continuing to draw fresh money into stocks.
Banks continued to underperform, partly out of concern that a surge in their lending due to government pressure might increase their bad loans. The biggest banks, Industrial & Commercial Bank of China, lost 1.02 percent to 3.90 yuan.
But many other stocks were bought after the Shanghai Securities News and 21st Century Business Herald quoted unnamed sources as saying China would soon announce steps to help light industry, with the goal of boosting domestic consumption and moving the sector up the value chain over the next three years.
The government would cut consumption taxes on alcohol, cosmetics, jewellery and watches, raise import tariffs on luxury consumer goods, and lift export tax refunds on products such as home appliances and furniture, the newspapers said. The threshold at which individuals start paying income tax might be raised.
'The market will remain quite strong for a couple of weeks, though after the recent rally, consolidations may occur at any time,' said Zhang Yanbing, an analyst at Zheshang Securities.
During the midday break, the government announced weaker-than-expected January trade data; exports fell 17.5 percent from a year earlier, compared to economists' forecasts of a 10.8 percent drop.
But the figures were distorted by a long Lunar New Year holiday which occurred in January 2009 but in February 2008, so they may have little impact on the market.
Non-ferrous metals shares stayed strong despite a pull-back in copper prices. Jiangxi Copper rose 1.03 percent to 18.60 yuan.
Aluminum Corp of China (Chalco), playing catch-up after being suspended for a day during which it denied talk of a change in senior management, jumped 6.90 percent to 10.22 yuan.
Beijing Capital Tourism climbed 4.18 percent to 18.20 yuan, and has now gained 69 percent this month. Traders linked the surge to local media reports that Beijing was gearing up to build a movie theme park.
Guizhou Guihang Automotive raced up its 10 percent daily limit to 10.01 yuan, after being suspended since the end of last year. It said it planned to issue up to 110 million shares at 8.03 yuan each to group companies to buy aerospace assets.
($1 = 6.83 Yuan)
(Editing by Andrew Torchia)
((junjie.zhang@thomsonreuters.com; (8621) 6104-1775; Reuters
Messaging: junjie.zhang.reuters.com@reuters.net))) Hong Kong report Taiwan report Shanghai indices Shenzhen indices Hong Kong indices H-share index Red share index SPEED GUIDES RELATED NEWS AND OTHER TOPICS China news All equity news Greater China news Chinese summary Hong Kong news Chinese hot stocks Taiwan news China IPOs Chinese diary Hong Kong IPOs Press digests Keywords: MARKETS CHINA STOCKS MIDDAY (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra : visit http://topnews.session.rservices.com * BridgeStation: view story .134 * Reuters Plus: from your WebDSS screen For more information on Top News, visit http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.