Financials and property boost China stocks 1.54 percent

Strong financials and property stocks led Chinese shares higher on Tuesday, although turnover remained thin while oil refiners and steel makers sagged. The Shanghai Composite Index ended up 1.54 percent at 2,803.019 points, recouping most of the losses suffered on Monday.
When it slid 2.52 percent on concern that monetary policy might be tightened further to fight inflation. The biggest bank, Industrial & Commercial Bank of China, rose 2.16 percent to 5.20 yuan while property giant Vanke climbed 3.77 percent to 9.35 yuan - further signs that some funds were resuming buying blue chips in the belief that many valuations had fallen to reasonable levels.
Over the past week, the index has repeatedly tested and held on a closing basis chart support at 2,723-2,732 points, its late February 2007 and March 2007 lows. Some investors believe that level may be a base for a rally.
Also, there was speculation on Tuesday that a speech last weekend by securities regulator Shang Fulin, in which he pledged to ensure the stability of the capital markets, could be followed by concrete government action to stimulate the stock market.
Such speculation boosted brokerage shares on Tuesday, with Haitong Securities up 8.84 percent to 24.88 yuan, although in recent months regulators have shown little sign of taking the steps for which investors have been hoping, such as the introduction of margin trade in stocks.
Gaining Shanghai stocks outnumbered losers by 796 to 110 on Tuesday, but turnover in Shanghai A shares was just 49.7 billion yuan ($7.2 billion) returning to its levels before anticipation of last week's domestic fuel price hike prompted a strong rally. PetroChina, the index's biggest stock, dropped 0.26 percent to 15.32 yuan. Leading steel maker Baoshan Iron and Steel tumbled 7.83 percent to 9.06 yuan after it agreed on the highest price hike in at least a decade for iron ore term contracts with miner Rio Tinto.
Baosteel's drop appeared to confirm a break of major chart support around 10.00 yuan, which had provided a floor for the stock in April this year and in mid-2007. Further, minor supports lie at the March 25 low of 8.45 yuan and the February 2007 low of 7.52 yuan.