An investor monitors stock price movements at a brokerage in Wuhan, Central China's Hubei Province July 24, 2007. [newsphoto]

China's main stock index sailed past the 4,300 mark on Wednesday and move closer to the record high on strong corporate earnings.

The Shanghai Composite Index closed 2.70 percent higher at 4,323.96 after hitting an intra-day high of 4,325.38, within reach of the record high of 4,335.96 set on May 29. The Shenzhen Composite Index rose 0.79 percent to 1,224.71.

The rise was mainly fueled by strong earnings in listed firms. As of Wednesday, 86 firms have released their mid-term reports, registering a 58.28 percent growth in weighted earnings per share and a 87.09 percent rise in net profit, according to data from TX Investment Consulting Co.

Air China soared 6.94 percent to close at 12.02 yuan per share, after it forecast its net profits would rise 2,000 percent year-on-year in the first six months.

The banking sector forged upwards. Bank of Nanjing, Bank of Ningbo and China CITIC Bank jumped their daily limit of 10 percent, followed by a 7.28 percent rise at the Bank of Communications to 16.28 yuan.

Bank of China increased 2.43 percent to 5.49 yuan, while the Industrial and Commercial Bank of China went up 2.64 percent to close at 5.84 yuan.

Trading volume in the Shanghai Stock Exchange shrank to 125.68 billion yuan from 141.4 billion yuan on the previous session, as turnover in the Shenzhen Stock Exchange was down to 66.53 billon yuan from Tuesday's 76.55 billion yuan.

Analysts suggest investors should act on the side of caution as profit-taking will be heavy now that the index has broken the 4,300 barrier.

The market has been highly volatile and seen a series of sharp falls since May 29 after the government tripled the stamp tax on stock trading to curb speculation. The index fell sharply after nearing the record in June.

However, it gradually recovered and investors are regaining confidence, driving up the Shanghai index. As an indication of investor faith, the number of new A-share investment accounts opened daily bounced back to 107,324 on Monday, exceeding 100,000 for the first time in three weeks.

In currency trading, the central bank Wednesday set the mid-point at 7.5596 yuan to the US dollar, a new high. The yuan can move 0.5 percent up or down the mid-point each day.

The Chinese currency has gained 6.79 percent since China revalued the yuan by 2.1 percent and ended a peg to the US dollar in July 2005.