2010-12-03 10:17

SHANGHAI - Chinese mainland stocks rose for a second day as improving global economic data and speculation that Europe's debt crisis will be contained bolstered the outlook for the nation's exports.

PetroChina Co and Jiangxi Copper Co led commodity stocks higher as crude and copper prices jumped after a report showed US employment rose by the most since November 2007. Huaneng Power International Inc advanced 3.34 percent on Thursday, leading gains for electricity producers, on the prospect a government freeze in coal prices will lower costs.

"The improving US data will help boost investor confidence and overall market performance," said Shen Nan, a strategist at Changjiang Securities Co in Shanghai. "The Chinese mainland market has become more closely linked to the world economy."

The Shanghai Composite Index added 0.71 percent to 2843.61 at the 3 pm close on Thursday. The CSI 300 Index advanced 0.61 percent to 3155.06.

PetroChina rose 1.19 percent to 11.10 yuan ($1.67) on Thursday. China Petroleum & Chemical Corp gained 0.9 percent to 8.15 yuan.

Oil traded near the highest in almost three weeks after greater-than-forecast growth in US private employment bolstered optimism fuel demand will increase in the world's biggest crude-consuming nation.

Europe's manufacturing industries expanded at the fastest pace in four months in November, led by Germany, the region's largest economy. Europe and the United States are China's two biggest overseas markets, accounting for about 40 percent of the nation's total exports in the first 10 months.

Copper producers led the rally for material companies on Thursday, with Jiangxi Copper adding 2.1 percent. Aluminum Corp of China Ltd climbed 0.69 percent to 10.24 yuan.

Huaneng Power led gains for utilities, increasing 3.34 percent to 6.18 yuan.

The government's order to freeze prices of coal used in electricity generation will help the power companies reduce production costs.

Producers were ordered to keep thermal coal prices unchanged next year from 2010 levels, Xinhua News Agency said, citing Cao Changqing, head of pricing at the National Development and Reform Commission. "Any form of price increase is not allowed."

Inflation in the Chinese mainland, the world's largest coal consumer, rose to the highest in more than two years in October, prompting the government to tell local departments to keep prices stable. Coal prices may start to drop in December, Xinhua said.

The Chinese mainland should channel its high level of savings from banks to the stock market in order to avoid risks to the financial system and further develop the capital markets, according to central bank adviser Li Daokui.

"Mainland bank savings remain at a very high level," Li said in an interview with the People's Daily. "There could be potential risks for the banks and the nation's whole financial system if there happens to be a large number of withdrawals suddenly."

Hong Kong's Hang Seng Index of stocks rose for a second day as improving economic reports and speculation Europe's debt crisis will be contained boosted confidence in a global recovery.

"Market sentiment has turned to bullish from bearish because of the positive economic data," said Francis Lun, general manager at Fulbright Securities Ltd in Hong Kong.

The Hang Seng Index rose 0.86 percent to 23448.78 at the close on Thursday, its highest close since Nov 22. The Hang Seng China Enterprises Index of H shares of mainland companies gained 1.06 percent to 13087.40.

Bloomberg News