Chinese stocks end firmer

China's main stock index closed 2.42 percent higher on Tuesday in a strong rebound after an early tumble, suggesting to some analysts that the bruising downtrend of the past week might have ended.
"The short-term correction has finished," said Chen Jinren at Huatai Securities, adding that the previously overheated prices of most big financial stocks had now fallen to reasonable levels.
Though profit-taking in financials may not have completely ended, they will now be under less pressure to fall, allowing the index to halt its slide, he and other analysts said. The Shanghai Composite Index closed at 2,675.697 points, just off an intra-day high of 2,677.042 hit in late trade.
It had plunged in the morning to 2,541.525, its lowest level since late December, bringing its fall from last month's all-time high to 15 percent. Last year, the index soared 130 percent.
Turnover in Shanghai A shares, which had been shrinking for a week as investors withdrew from the market, bounced back to 67.8 billion yuan ($8.7 billion) from 54.1 billion yuan on Monday. A total of 719 stocks rose while only 132 fell.
The Shanghai market has dropped from over 40 times 2005 earnings at last month's peak to about 35 - still very high compared to overseas markets, but not prohibitively so given expectations that 2006 corporate earnings are likely to show growth of about 25 percent, analysts said.
The index plunged in the morning after Cheng Siwei, a vice-chairman of the standing committee of parliament, wrote in the official Financial News that the market was overheated from an influx of domestic and overseas funds.
Industrial & Commercial Bank of China, the most heavily weighted stock, closed up 4.26 percent at 4.89 yuan in its first big rise since January 23. ICBC led a general rebound of banks. Minsheng Bank jumped its 10 percent daily limit to 11.92 yuan and Huaxia Bank was limit-up to 9.52 yuan.
Industrial Bank, which rose a moderately disappointing 39 percent when it listed on Monday, hit an intra-day low of 21.31 yuan after announcing a 2006 earnings estimate that was slightly below analyst forecasts. But it closed 7.35 percent higher at 23.81 yuan.