The rally may be short-lived, however.

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Analysts said the Shanghai Composite Index - hovering just north of the 3,000 mark - faces near-term pressure from profit taking.

The index, which tracks yuan-denominated A shares and hard-currency B shares, inched up 0.83 percent yesterday to 3,057.38. The peak was the highest since February 26 when the index settled at 3,040.60.

Yesterday's turnover hit 90.2 billion yuan (US$11.7 billion), compared with 82.6 billion yuan the day before.

"The gains were led by the heavily weighted blue chips," said Chen Jinren, an analyst at Huatai Securities Co.

Big caps including refiners, real estate developers and banks were among the main drivers.

An investor monitors stock movements at a stock exchange market in Shanghai March 19, 2007. China's main stock index jumped 2.87 percent on Monday, nearing its all-time high, as bank shares surged following an interest rate hike at the weekend. [Reuters]

Shanghai Lujiazui Finance & Trade Zone Development Co hit the daily trading limit by jumping 10 percent to 18.44 yuan. Retail giant Shanghai Bailian Group Co Ltd surged 9.98 percent to 13.55 yuan. Jiangxi Copper Co Ltd, the nation's biggest copper producer, advanced 9.98 percent to 19.83 yuan.

The runup came after senior legislator Cheng Siwei said on Tuesday he was "confident about the stock market."

During a speech at Fudan University, Cheng said the government should ramp up efforts to create a fair and open market scenario.

Cheng, vice chairman of the Standing Committee of the National People's Congress, also warned investors against the blind pursuit of overvalued chips.

Analysts also cautioned investors against the risk of corrections in the near term as pressures mount above the 3,000 mark, considered a psychological threshold.

"We see the 3,000-mark as a high level for the index, which has surged all the way from 900 since June 2005," said Peng Yunliang, an analyst at Shanghai Securities Co. "Plus, many stocks are overvalued after strong gains during recent trading."

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