The Shanghai Stock Exchange yesterday announced that it is raising the upper limit for the bidding price of stocks on their first day of trade.

The upper limit is being raised from the current 200 percent of issue price or the last closing price to 900 percent. The lower limit remains at 50 percent. All biddings higher than 900 percent or lower than 50 percent will be regarded as invalid.

The stock exchange warned investors that the new regulation can only be applied to stocks that are not subject to the first trading day price fluctuation limit.

These stocks include those of companies that have issued initial public offerings (IPOs), companies that have issued their first shares, the ones that have just completed their share structure reform, and companies that have resumed trading after a period of suspension.

"The new regulation can ease the hectic buying in the trading period to some extent," said Zhang Yidong, an analyst at Industrial Securities. "The amount of buying bids before the trading starts jacks up the stock price in the trading period."

The Shanghai Composite Index rose 0.6 percent to close at 3743.96 yesterday, rebounding from a loss of 1.8 percent in the morning session. The turnover on the exchange was 175.5 billion yuan, down from the record high of 203.9 billion yuan on Tuesday. Only 329 out of 907 stocks closed higher.

Financial stocks, which are heavily weighted in the index, led the rally, shrugging off the influence of other falling stocks.

Huaxia Bank rose to its daily limit to close at 13.26 yuan. Bank of China increased 3.14 percent to close at 5.76 yuan while Ping An climbed 1.6 percent to close at 5.76 yuan.

Analysts said the temporary drop in the morning session was partly caused by fears of policy tightening that triggered profit-taking.

"Rumors, such as the government may publish an editorial to warn the risks in the stock market and that interest rates may rise soon, may have led some investors to sell," said Chen Wenzhao, an analyst at Changjiang Securities.

But Industrial Securities' Zhang said the stock market will maintain the upward trend, with periodic fluctuations.

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