Chinese stocks surged 3.32 percent in a broad rally to a nine-month closing high on Monday, boosted by rising confidence in the economic outlook after new data for April suggested the manufacturing sector was improving. The Shanghai Composite Index ended at 2,559.911 points after its biggest daily percentage gain in two months, leaving it within easy striking distance of the previous high for the year of 2,579.218 points.
The index made a strong start to the month after climbing only 4.4 percent in April, its weakest monthly gain this year and slowing from a 14 percent rise in March. Gaining Shanghai A shares overwhelmed losers by 919 to 11, with more than 35 Shanghai A shares jumping their 10 percent daily limit.
Turnover in Shanghai A shares rose to 146.2 billion yuan ($21.4 billion) from Thursday's 128.1 billion yuan. Brokerage CLSA said its China Purchasing Managers' Index (PMI) rose to 50.1 in April from 44.8 in March, the first time the seasonally adjusted index climbed above the 50-point boom-or-bust line since July 2008.
"The PMI boosted investor confidence in an economic recovery in the second quarter," said Western Securities analyst Cao Xuefeng. An easing of concerns about the new H1N1 flu virus improved sentiment, after Mexico announced on Sunday that its flu epidemic had passed the worst and experts said the new virus may be no more severe than normal seasonal flu.
Analysts expected the index to move between 2,500 and 2,600 points this week, as the market awaited more April data due early next week to confirm whether the economic recovery was strong enough to justify a further rally. "The previous high will be hit soon but the index is likely to consolidate around that level," said Huatai Securities analyst Li Wenhui, adding that market turnover remained lacklustre.
Coal shares led, with China Shenhua Energy jumping 7.93 percent to 26.69 yuan while Jiangxi Copper gained 6.07 percent to 25.70 yuan. Steel industry leader Baoshan Iron and Steel climbed 4.50 percent to 6.04 yuan while Guangzhou Steel raced up its 10 percent daily limit to 4.73 yuan after saying it had set up a venture with Linde.
PetroChina, the most heavily weighted stock in the index, gained 3.20 percent to 11.94 yuan. Property sector leader China Vanke advanced 3.77 percent to 8.80 yuan. Analysts said China's property market may have finally found a floor, with steep price falls having come to an end while sales were recovering. Drugmakers were mixed after an easing of flu concerns, with China Animal Husbandry Industry Co, a maker of animal health products, slipping 1.50 percent to 23.00 yuan after rising 20 percent over the previous four sessions.