SHANGHAI - China's main stock index rose above 3,000 points for the first time on Friday and then fluctuated in a narrow range, as selling pressure on large caps increased whenever the index climbed far above that level.

The Shanghai Composite Index had risen 0.50 percent by midday to 3,007.943 points, after hitting a record intra-day high of 3,027.742. It jumped 3.03 percent on Thursday.

Turnover was heavy at 47.1 billion yuan ($6.1 billion), up from 46.3 billion yuan on Thursday morning. A total of 648 shares rose while 205 fell.

"After hitting the record high, people become cautious and begann to take profits on the last trading day before the holidays," said Guo Yanling, analyst at Shanghai Securities. The market will be closed throughout next week for Chinese New Year.

Guo said the market's underlying mood remained bullish, supported by strong corporate earnings as the 2006 reporting season picked up.

Many traders, however, believe the index has not broken decisively above 3,000 points, which proved strong resistance in January.

Continued profit-taking above 3,000 remains likely and an extended rally after Chinese New Year is not inevitable, they said. Many investors may wait for positive cues from the National People's Congress in Beijing, which meets in the first half of March, before buying aggressively.

The index's return to the 3,000 point area refocused attention on the high valuations of large caps, particularly financials, and these were sluggish on Friday.

Bank of China , which had jumped 4 percent on Thursday, rose only 0.2 percent to 4.95 yuan, while oil refiner Sinopec fell 1.56 percent to 9.49 yuan.

But smaller stocks continued to draw active buying in response to news and speculation.

Baotou Steel surged 7.78 percent to an all-time high of 4.57 yuan, breaking its previous record intra-day high of 4.34 yuan, on continued anticipation of its parent company's eventual listing. The Shanghai Securities News carried an analysis of the plan on Friday.

Sichuan Changhong Electric Appliance Co. climbed 2.06 percent to 5.45 yuan after it reported a 7 percent rise in net profit last year, thanks to good growth in sales of newly introduced product lines. Total sales rose to a record. ($1 = 7.74 yuan)