China's shares edged up 0.3 percent on Friday as investors picked up bargain large caps such as top domestic TV maker Changhong, a day after the market posted its biggest single-day fall in nearly two months. But analysts said a faster-than-expected rise in consumer prices stoked fears that Beijing would soon hike interest rates again, capping gains. The benchmark Shanghai composite index closed at 1,289.941 points after it dived 2.3 percent on Thursday, recording its biggest one-day drop since January 17.
Sichuan Changhong Electric Appliances Co Ltd, the largest television maker in the domestic electronics market, surged 5.2 percent to 4.07 yuan to become one of the day's most active stocks.
But it is still down 17 percent from late December, when the firm warned of a huge potential loss for 2004 stemming from what it called unpaid debts owed by a business partner.
"The market merely took a break from a steep fall yesterday. Today's rally does not represent the beginning of an uptrend," warned analyst Chen Huiqin at Huatai Securities.
Chinese consumer prices rose 3.9 percent in the year through February, versus 1.9 percent in the 12 months through January and marking the first reacceleration in seven months, official data showed on Friday.
"The index is likely to move narrowly around 1,300 points next week, but downward pressure is mounting in the face of growing CPI," said Guotai Junan Securities' analyst Qu Yongxiang. China Southern Airlines Co Ltd, which operates the country's largest fleet, closed up 1 percent at 4.16 yuan on Friday.
The stock had dived 22 percent since the start of 2005 on fears that surging oil prices would raise costs for the aviation industry and hurt carriers' bottom lines. China's benchmark index slid 15 percent in 2004, becoming Asia's worst performer that year, battered by economic cooling steps, corporate scandals and fears of impending stock sales.