2010-08-31 11:07

SHANGHAI - Mainland stocks rose the most in two weeks, led by commodity and consumer companies, as Federal Reserve Chairman Ben Bernanke's vow to safeguard the US recovery eased concern the global economic slowdown will worsen.

China Shenhua Energy Co, the nation's biggest coal producer, climbed the most in a week after reporting a 14 percent jump in profit that beat analyst estimates. Kweichow Moutai Co and Tsingtao Brewery Co advanced at least 4 percent on speculation rising consumer prices will boost their earnings.

"The pledge from the United States may create a favorable environment for China to engineer a soft landing for its economy," said Dai Ming, a fund manager at Shanghai Kingsun Investment Management & Consulting Co.

The Shanghai Composite Index gained 41.92, or 1.61 percent, to 2,652.66 on Monday, the biggest gain since Aug 16. It dropped 1.2 percent last week. The CSI 300 Index rose 1.97 percent to 2,915.01 on Monday.

"The US will very likely introduce additional stimulus measures to prevent a double-dip for its economy," said Wei Wei, an analyst at West China Securities Co in Shanghai. "To some extent, that will alleviate lingering concern about a faltering global economic recovery."

China's consumer prices may reach this year's peak of about 4 percent in September or October, China Business News reported on Monday, citing Ba Shusong, deputy head of the financial institute of the State Council's Development Research Center.

Inflation accelerated to 3.3 percent in July, the fastest in 21 months. Rising prices may boost the earnings of makers of consumer goods.

The first negative fund flow into China in three months "bodes ill" for Chinese stocks in the near term, according to China International Capital Corp.

"A potential economic relapse and a Fed almost out of bullets are important headwinds in the coming months for Chinese markets," Hao Hong, a Beijing-based global equity strategist at China International Capital Corporation Ltd, wrote in a note to clients. "Further, we note that fund flows into China have turned negative for the first time in the past 12 weeks. When fund flows turned negative sequentially for the first time on Jan 20 and May 5 this year, Chinese markets have subsequently underperformed."

Hang Seng gains

Hong Kong stocks rose, halting six days of declines by the benchmark index, as the Federal Reserve pledged to safeguard the US economic recovery, and companies including China Resources Land Ltd reported higher earnings.

The Hang Seng Index climbed 0.68 percent to 20737.22 on Monday, halting a six-day, 2.3 percent decline.

The Hang Seng China Enterprises Index of H shares of mainland companies advanced 1.2 percent to 11531.72 on Monday.