| Shares rebound 4.7%, fueled by buying of financial, transport stocks |
SHANGHAI, Jan 15 (AP) -- Chinese stocks posted their biggest one-day advance in a year-and-a-half Monday, rebounding from a plunge on Friday amid renewed interest in financial and transport shares.
The Shanghai Composite Index gained 4.7 percent to 2,794.70, its biggest single-day gain since June 8, 2005, when the index surged 8.2 percent. It had tumbled 3.7 percent Friday.
The Shenzhen Composite Index on China's smaller exchange rose 5.3 percent to 631.35.
"Though the overall market surged today on bargain hunting, I remain cautious as most stocks have been overvalued after sharp gains in the second half of 2006," said Liu Yisong, an analyst at Galaxy Securities.
Bank stocks rebounded, with ICBC, China's biggest lender by assets, climbing 4.5 percent to 5.57 yuan and Bank of China jumped 5.5 percent to 4.99 yuan.
Insurer China Life surged to 43.45 yuan late in the session, hitting the 10 percent daily limit on speculation Chinese regulators may let local insurers put a larger part of their investment portfolios in securities, said Zhang Yuheng, an analyst at CSC International Holdings.
Chinese insurers' stock holdings account for only a fraction of the local stock market's value of 6 trillion yuan, analysts said.
Transport stocks were among the day's big gainers following news China cut the price of domestic gasoline and jet fuel, effective Sunday, because of a slide in international oil prices.
Shanghai Bashi Industrial Group jumped 5.5 percent to 4.58 yuan and Dazhong Transportation Group soared 9.7 percent to 8.26 yuan. Both are Shanghai-based bus operators.
Airlines also rose on the news. Air China rose 4.3 percent to 7.07 yuan and China Eastern Airlines ended 3.5 percent higher at 4.19 yuan.
Analysts said there's still room for Beijing to take similar steps in the future as local oil prices are kept higher than international levels by government controls.
In currency dealings, dollar weakness pushed the yuan to its highest level since the current trading system was set up in July 2005.
On the over-the-counter market the dollar was at 7.7931 around 0730 GMT, down from Friday's close of 7.7984.
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