Chinese shares soar 1.3 percent

Chinese shares rose 1.31 percent on Tuesday, following a 1 percent drop in the previous session, with financial plays extending gains and several counters rallying on a technical rebound.
The benchmark Shanghai composite index finished at 1,888.239 points, just off its intra-day peak of 1,888.432 points. Turnover in Shanghai A-shares was 23.5 billion yuan ($3 billion), compared to 27.5 billion on Monday. Luo Xiaoming, analyst at Ping An Securities, said the index was unlikely to rise above 1,900 this week.
"The market's rise these two weeks relied too much on certain sectors such as the banking sector, which had already reached a high level," he said.
"While investors see no sign of strong rises in other stocks, they dare not inject more funds into the banking sector either, which means the market will lack incentives for further rises in the short term," Luo added. But he said in the medium term, the market could still expect a general rise. Many analysts also believe the index may test the key 2,000 level before the end of 2006.
Shanghai Pudong Development Bank, partly owned by Citigroup, jumped 3.95 percent to 14.99 yuan after the lender said on Tuesday it would raise up to 6 billion yuan through an additional offering to boost its capital.
The issue had been expected for months. Pudong Bank earlier obtained regulators' approval to issue up to 700 million new shares, but the pricing of 13.64 yuan per share means it will only issue up to 440 million, according to Reuters calculations.
That has helped ease recent investor jitters of the bank's earnings dilution, and helped its gain on Tuesday, analysts said. Industrial and Commercial Bank of China rose 2.27 percent to a record closing level of 3.60 yuan, hitting 3.62 yuan during trade.
Daqin Railway, which fell over 3 percent on Monday, rose 3.86 percent to 6.45 yuan. The price was still 5 percent lower than its trading peak of 6.79 yuan hit on November 7. FAW Xiali rose 2.72 percent to 4.16 yuan, following a 7.53 percent drop on Monday. Peer stock Changan Auto rallied 1.55 percent to 5.23 yuan.
Jiangxi Copper ended off 0.38 percent at 10.47 yuan, extending a 6.66 percent fall on Monday, even after news that the largest copper producer in China would set up a joint venture plant for water treatment with BioteQ Environmental Technologies Inc.