Stocks rise on news of US debt deal

08:35, August 02, 2011      

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Stocks on the Chinese mainland rose for the first time in three days as US lawmakers reached agreement to raise the debt ceiling and avoid default, while a gauge of Chinese manufacturing exceeded economists' estimates.

Jiangxi Copper Co led commodity producers higher after metal prices advanced on speculation the US may avoid a debt default. China Vanke Co, the biggest developer, jumped the most in a month after the Oriental Morning Post said some cities may ease or cancel limits for home purchases next year. Banks fell, paced by Industrial &Commercial Bank of China Ltd, after China Business News reported slowing banks' profit growth.

"The agreement eased investors' concerns over US default risks and the global economic recovery," said Wu Kan, a fund manager at Dazhong Insurance Co, which oversees $285 million. "The worst scenario has been removed."

The Shanghai Composite Index added 2 points, or 0.1 percent, to 2703.78 at the 3 pm close. It slid 2.5 percent last week, the most since the period to May 27. The CSI 300 Index gained 0.2 percent to 2977.72.

The Shanghai Composite has fallen 3.7 percent this year as the People's Bank of China raised interest rates three times and ordered lenders to set aside more cash as deposit reserves six times to contain inflation, which has quickened to the fastest pace in three years.

Asian stock markets and commodity prices advanced after US President Barack Obama said leaders of both parties in the House and Senate had approved an agreement to raise the nation's debt ceiling and cut the federal deficit.

Jiangxi Copper, China's biggest producer of the metal, climbed 1.4 percent to 36.58 yuan. Aluminum Corp of China Ltd advanced 0.8 percent to 10.44 yuan. Yanzhou Coal Mining Co advanced 1.4 percent to 33.02 yuan.

Copper for delivery in three months added as much as 0.7 percent to $9,894 a ton in London, trading near the highest level since April. Crude for September delivery rose as much as $1.59 to $97.29 a barrel in electronic trading on the New York Mercantile Exchange.

A separate manufacturing index for China released on Monday by HSBC Holdings Plc and Markit Economics fell to 49.3 for July from 50.1 in June. China Vanke increased 1.7 percent to 8.29 yuan, the most since July 1. Poly Real Estate Group Co, the second-largest developer, added 2.1 percent to 10.69 yuan.

Some Chinese cities may ease or cancel limits for home purchases next year to support local economic growth, Oriental Morning Post reported Monday, citing Yang Hongxu, head of E-House China R&D Institute. As many as 20 small cities may impose home purchase limits in addition to large cities such as Beijing and Shanghai that already imposed such restrictions, according to the Shanghai-based newspaper.

Source:China Daily
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