SHANGHAI - China's benchmark stock index climbed as high as 2,000 points on Monday for the first time since July 2001, as bank shares and other blue chips jumped on the back of massive new inflows of local and foreign money.

The rise brought the index's gains so far this year to 72 percent, which makes China one of the world's best-performing equities markets. Analysts said there was still no clear sign that the rally would falter any time soon.

"Sentiment is so strong that we can't predict any immediate resistance," said Qian Qimin at Shenyin & Wanguo Securities, one of the biggest local securities houses.

A stock investor monitors the changes of stock and fund indexes at a securities trading office in Beijing November 20, 2006. The Shanghai stock index rose as high as 2,000 points, a 63-month high. [newsphoto]

"Investors are expected to continue to focus on banking stocks and other large-caps such as Sinopec. The performance of such stocks will decide how much further the market could rise."

The Shanghai composite index had risen 1.35 percent to 1,998.337 points by midday after hitting an intra-day high of 2,001.341, the highest level since a high of 2,056.773 points on July 30, 2001.

Turnover in Shanghai A-shares was a heavy 17.7 billion yuan ($2.25 billion) at noon, up from 13.6 billion on Friday morning. Trading volumes, one indication of investor interest in the market, are running at about twice levels earlier this year.

The index's all-time high is 2,245.435 points, hit in June 2001, and many investors now believe that may be surpassed in the next few months.

The domestic listings of a series of China's biggest companies this year ICBC, have fuelled interest in the market, while regulatory and structural reforms -- particularly the removal of a $250 billion overhang of non-traded shares held by the state -- have increased investor confidence.

This year, China has quickened the pace at which it allows foreign money into the stock market under its Qualified Foreign Institutional Investor programme. Last week, it gave fresh foreign exchange quotas totalling $400 million to three foreign firms, bringing the overall quota to $8.645 billion.

Even a slowdown in Shanghai's real estate market, partly because of a government crackdown on real estate speculation, has helped the stock market, by diverting money from property to shares in the past few months.

Major banking stocks, heavily weighted in the index, have led the charge over the past week, partly because they are expected to play a large role in the stock index futures contract which China's new derivatives exchange plans to launch early next year.

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