China shares gain despite fall in consumer prices

Chinese shares rebounded Tuesday after a three-day decline as investors shrugged off news that consumer prices fell in February.

The benchmark Shanghai Composite Index jumped 39.82 points, or 1.9 percent, to close at 2,158.57. The Shenzhen Composite Index for China's smaller second exchange rose 1.9 percent to 699.8.

Analysts said the markets were due for a correction following sharp losses in previous sessions. They said investors were not put off by news that consumer prices fell 1.6 percent in February, even though deflation usually hurts stock prices.

The fall in the consumer price index, the first in more than six years, underscored weakness in the world's third-largest economy, but officials downplayed the risk of a deflationary spiral.

"Investors tended to interpret the bad figure in a good way since there is no other worse news," said Chen Jinren, an analyst for Huatai Securities in the eastern city of Nanjing.

Nonferrous metal and cement makers rose strongly.

Jiangxi Copper Ltd., the country's second-largest metal producer, increased 3.7 percent to 16.69 yuan; Huludao Zinc Industry Co. soared 6.5 percent to 5.22 yuan, while Aluminum Corp. of China (nyse: ACH - news - people ), also known as Chalco, added 1.8 percent to 9.18 yuan.

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