Rare earth and oil firms lead Shanghai index up

08:21, December 30, 2010      

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Shanghai's key stock index edged up from a five-day losing streak this morning on strength of rising rare earth and oil producers.

The Shanghai Composite Index crept up 0.10 percent, or 2.83 points, to 2,735.82 this morning. Despite the limited gains, turnover continued to shrink to only 39.22 billion yuan (US$5.92 billion) from 57.60 billion yuan yesterday morning.

China announced yesterday it will cut its first batch of rare earth export quotas for next year by 11 percent due to environment concerns.

The news gave a drive to producers of the precious metal, whose shares have already enjoyed long-time rallies due to concerns supply may far lag demand to cause prices to soar.

Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co climbed 0.82 percent to 65.42 yuan. Xiamen Tungston Co added 0.80 percent to 44.03 yuan.

China supplies more than 90 percent of the world's rare earths - a group of 17 chemically similar metallic elements that are vital in the manufacture of a wide range of products from cell phones, hybrid cars to wind turbines and missiles.

China is curbing exports by cutting the quota and raising tariffs as years of reckless exploitation have led to wastage in resources and cause pollution.

Heavyweights in oil producing industry rose after prices of the commodity jumped above US$91 a barrel yesterday in New York.

PetroChina, the country's largest oil producer, inched up 0.27 percent to 11.10 yuan. Sinopec Shanghai Petrochemical Co advanced 0.12 percent to 8.41 yuan.

But the market may still be uncertain as car makers slumped on concerns that a lift of car tax will slow car sales

SAIC Motor, China's largest carmaker, retreated 0.14 percent to 14.58 yuan. Beiqi Foton Motor Co shed 3.26 percent to 23.12 yuan.

The purchase tax for vehicles with engines under 1.6 liters will be revised upwards to 10 percent from January 1 next year, the Ministry of Finance said on its website yesterday.

Source: Shanghai Daily
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