Chinese stocks rose sharply on Friday, recovering almost all of Thursday's 4.52 percent loss, as confidence returned after a brief panic in response to high inflation data. The benchmark Shanghai Composite Index ended 3.92 percent higher at 3,584.204 points, less than 1 percent below Wednesday's finish of 3,612.396.
Turnover in Shanghai A shares was heavy at 155.1 billion yuan ($20.1 billion), although down from Thursday's record 186.7 billion yuan. Gainers far outnumbered losers by 848 to 8. "What we saw today was a relief rally," said Shanghai Securities analyst Zhang Yong. "A lot of people were worried that the data would be bad, but the numbers released yesterday showed that these concerns were exaggerated."
Thursday's tumble was caused by news that consumer price inflation jumped to 3.3 percent in March from 2.7 percent in February. That makes a 0.27 percentage point hike in benchmark interest rates likely in coming days or weeks, analysts said.
But many investors viewed Thursday's drop as a natural pull-back after a spectacular rise - the index had surged 26 percent from the end of February to this week's record high - rather than as the beginning of an extended slide.
While the market may stay volatile in coming weeks as investors worry about inflation, strong support for the index is believed to lie around 3,200 points and around 3,000, a level which capped the market in January and February. Mainland-listed automakers rose strongly amid a flow of news from the 2007 Shanghai Auto Show, Asia's premier auto industry event.