China shares at 2-month high on strong liquidity

China shares hit 2-month high on strong fund inflows, higher oil prices

• On 4:19 am EDT, Tuesday October 20, 2009

SHANGHAI (AP) -- Chinese shares climbed to a two-month high Tuesday on fund inflows spurred by expectations for a stronger yuan and on continued strength in oil and other commodities.

The benchmark Shanghai Composite Index rose 46.18 points, or 1.5 percent, to 3,084.45. The Shenzhen Composite Index for China's second exchange also jumped 1.5 percent, to 1,073.48.

Chinese shares tracked overnight gains on Wall Street as the weakening dollar raised expectations that so-called "hot money" will flow into Chinese investments, analysts said.

"The depreciation of dollar will cause a reallocation of global capital, quite some of which will flow into the Chinese market," said Mao Nan, an analyst for Oriental Securities in Shanghai.

Industrial & Commercial Bank of China Ltd., China's biggest commercial lender, added 2.2 percent to 5.11 yuan after Allianz SE and American Express Co. said they will maintain their holdings in the bank's Hong Kong shares after a lockup expires Tuesday. Bank of China Ltd. added 1.7 percent to 4.11 yuan, while China Construction Bank Ltd. gained 1.5 percent to 5.99 yuan.

Brokerages continued to climb ahead of the launch of a new board for small companies this Friday. Everbright Securities Co. jumped 2.7 percent to 24.09 yuan and Citic Securities Ltd., China's biggest brokerage by market value, rose 1.2 percent to 28.12 yuan.

Refiners advanced as oil prices surged above $80 per barrel in Asia. PetroChina Ltd., Asia's largest oil and gas producer, gained 1.5 percent to 13.80 yuan and China Petroleum & Chemical Corp. was up 1.6 percent to 12.17 yuan.

Shipping companies were boosted by reports of an improvement in trade in September, with China COSCO Holdings Co. up 2.3 percent to 14.19 yuan, and China Shipping Container Lines Co. rising 2.2 percent to 4.70 yuan.

In currency markets, the yuan strengthened to 6.8266 to the U.S. dollar, up from Monday's close of 6.8309.

Buzz up!