China¡¯s Stocks Rise to Eight-Month High; Shenhua, Baoshan Gain

China¡¯s stocks rose to the highest in almost eight months after new lending and money supply surged to records last month and the premier said the economy showed signs of a better-than-expected recovery in the first quarter.

China Shenhua Energy Co., the nation¡¯s largest coal producer, jumped the 10 percent daily limit on speculation prices will be raised. Baoshan Iron & Steel Co. added 4 percent as investors expect industrial production to pick up. Industrial & Commercial Bank of China Ltd. advanced to a five-month high as the central bank said it will ensure sufficient liquidity.

¡°The economy is recovering and we don¡¯t see any problem with the liquidity supply,¡± said Zhao Zifeng, a fund manager at China International Fund Management Co. in Shanghai, which manages the equivalent of $10.2 billion. ¡°The possibility of improvement in corporate earnings is increasing.¡±

The Shanghai Composite Index, which tracks the bigger of China¡¯s stock exchanges, rose 69.48, or 2.8 percent, to 2,513.70 at the close, the highest since Aug. 20. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, gained 2.4 percent to 2,656.52.

China Cosco Holdings Co. and China Shipping Development Co. jumped the 10 percent daily cap on expectation shipping lines will benefit from a pick up in the country¡¯s overseas sales.

The Shanghai Composite¡¯s 38 percent gain this year makes it the second-best performer among 88 key stock gauges tracked by Bloomberg globally. Stocks rallied on optimism the government¡¯s 4 trillion yuan ($585 billion) stimulus package and record new lending will spur a recovery in the world¡¯s third-largest economy amid the global recession. Interest rates were cut five times from September to December.

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