Chinese stocks surge

China's main stock index surged over 3 percent on Wednesday, partially recovering from massive losses in recent days, after regulators approved new domestic fund products in an apparent effort to support the market.
A rally soon after the opening, encouraged by rebounding Asian stock markets after the US Federal Reserve's big interest rate cut, quickly fizzled out and the Shanghai Composite Index ended the morning slightly lower. But the index resumed rising in the late afternoon and closed up 3.14 percent at 4,703.047 points, just off its intra-day high of 4,705.073.
The market had tumbled 17 percent over the previous six trading days because of weak stocks overseas, tightening Chinese monetary policy and concern about the market's ability to absorb heavy new supplies of shares.
But executives at two major brokerages told Reuters on Wednesday that the securities regulator had approved at least two new fund products, each of them up to 5 billion yuan ($691 million) in size, to invest in A shares.
Gaining Shanghai stocks outnumbered losers by 781 to 83, with over 50 Shanghai stocks jumping their 10 percent daily limits. Turnover in Shanghai A shares stayed active at 139.5 billion yuan ($19.3 billion), though it was down from Tuesday's 153.8 billion.
The index's 7.22 percent slide on Tuesday, its third biggest drop this decade, broke important technical support at 4,778-4,812 points, its November and December lows. This area has now become resistance.
Banks surged in the afternoon as institutions bought them back. Bank of Communications climbed 4.25 percent to 13.50 yuan after it estimated 2007 net profit rose at least 60 percent. Bank of Nanjing also outperformed, gaining 4.66 percent to 17.07 yuan, after saying net profit rose at least 50 percent last year.
Bank of China's A shares slid 2.88 percent to 6.07 yuan, but that was because they had been suspended on Tuesday and had not yet responded to the 8.60 percent plunge of its Hong Kong-listed H shares on that day. Ping An Insurance showed signs of stabilising. It rose 1.16 percent to 80.47 yuan, after plunging its 10 percent daily limit on both Monday and Tuesday.