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"A likely increase of the QFII quotas is great news to the market," said Lu Yizhen, who helps manage about US$640 million at Citic-Prudential Fund Management Co in Shanghai, according to Bloomberg today. "The government will keep adding QFII quotas at a controlled pace."

The Shanghai and Shenzhen Composite Index, which tracks yuan-denominated A shares listed on two domestic exchanges, climbed 26.59, or one percent, to 2,742.85 at noon break, set for a record close.

The Shanghai Composite Index, which tracks the bigger stock exchanges, added 1.1 percent to 3,108.95. The Shenzhen Composite Index, which covers the smaller one, rose 1.5 percent to 828.87. Both measures were headed for records.

Overseas investors are allowed to invest in China's yuan-denominated A-share market via the so-called qualified foreign institutional investor, or QFII, program.

China United, which controls the nation's second-largest cell-phone operator, rose 0.12 yuan (2 US cents), or 2.3 percent, to 5.40 yuan. Baoshan Iron & Steel Co, China's biggest steelmaker, added 0.26 yuan, or 2.9 percent, to 9.36 yuan. Shanghai Zhenhua Port Machinery Co, the world's biggest maker of container cranes, gained 0.34 yuan, or 2.2 percent, to 16.11 yuan.

China is studying ways to expand the investment quota for foreign investors, the State Administration of Foreign Exchange's Director Hu Xiaolian told reporters in Beijing on March 5.

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