Government's pledge lifts market in morning

SHANGHAI'S key stock index rose today after China yesterday vowed to keep economic growth on track next year. The benchmark Shanghai Composite Index rose 1.15 percent, or 32.80 points, to 2,873.84. Turnover was 76.9 billion yuan (US$11.6 billion). Shenzhen Composite Index, which tracks the smaller market in southern China, was up 2 percent to 1,324.75. A statement issued after China's leaders wrapped up an economic planning meeting yesterday said the government would keep its policy flexible, proactive and prudent while trying to maintain a balance between fast growth and stability. Worries about an increase of interest rate was partly relieved after China's central bank ordered commercial banks to put aside more money from landing last Friday, third in five weeks.

The reserve requirement rate will be raised by 0.5 percentage point after December 20. Some analysts said that China is not likely to raise interest rates in a short-term after the government vowed to keep its economic growth on track. Need for interest rate hike also eased as inflation pressure is likely to ease in December after government's measures to rein consumer prices. Banks were weak after China's central bank said yesterday that China's new yuan-dominated loans hit 564 billion yuan in November, leaving this year's total lending figure just 50 billion yuan short of the government's target maximum of 7.5 trillion yuan. Industrial and Commercial Bank of China dipped 0.24 percent to 4.22 yuan. China Construction Bank was unchanged at 4.74 yuan. Communications Bank of China edged up 0.36 percent to 5.60 yuan. Commodity producers gained after commodity prices rose on expectation that China's economic outlook will remain positive. Jiangxi Copper Co, China's largest copper producer, climbed 3.8 percent to 39.07 yuan. Aluminum Corp of China gained 1.1 percent to 10.31 yuan. PetroChina, the largest heavy weight, rose 1.1 percent to 11.58 yuan."


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