China stocks end up 0.6 pct in range-bound trade

Published: 31 Aug 2009 23:12:22 PST

SHANGHAI, Sept 1 - China's key stock index closed up 0.6 percent on Tuesday, led by banking stocks, winding up a day of range-bound trading with technically inspired buying and positive manufacturing data balancing weak sentiment and fresh negative news on share supplies.

The Shanghai Composite Index closed at 2,683.724 points, after rising more than 2 percent during intraday trading and falling as much as 1 percent.

The number of gaining Shanghai A shares virtually matched losers at 422 to 445, while turnover for Shanghai A shares fell to 101 billion yuan ($15 billion) from Monday's already thin 124 billion yuan, reflecting a lack of interest.

Shanghai Pudong Development Bank rose 3.92 percent to 18.54 yuan after the official Shanghai Securities News cited a bank official denying a report that the lender had suspended lending in August. "Some technical buying has emerged after yesterday's steep fall, but the rebound apparently lacks momentum," said analyst Li Wenhui from Huatai Securities in Nanjing, adding that there would be a battle to recapture the key 125-day moving average, now at 2,760, in the short term.

The index tumbled 6.74 percent on Monday, while posting its second-biggest monthly loss in 15 years in August, hit by new share supplies and high share valuations that had got ahead of earnings improvements.

The plunge pushed the 14-day Relative Strength Index (RSI) to a reading of 31 at Monday's close, near the oversold mark of 30.

And the average premium of mainland-listed A shares over Hong Kong-listed H shares of the same companies dropped to its lowest since January, at about 16 percent.

On Tuesday, China posted its official purchasing managers' index (PMI) for August, which inched up to a 16-month high of 54.0 from July's 53.3.

It was the sixth straight month that the official PMI stood above 50, indicating an expansion of activity in the manufacturing sector. The PMI plumbed a record low of 38.8 in November.

On the negative side, China's stock regulator said late on Monday that it would review on Friday an application by China National Chemical Engineering Co for a stock IPO worth around $428 million.