Shanghai's composite index rose 39.212 points, or 2.49 percent, to 1,616.072 while Shenzhen's sub-index climbed 72.34 points, or 2.19 percent, to 3,382.82.

Shanghai's hard currency B-share index rose 3.01 percent to 128.429 points while Shenzhen's was up 3.37 percent at 224.57. B shares are open to Chinese and foreign investors.

Market heavyweight China Merchants Bank, one of four listed lenders in China, was one of the most actively traded stocks and rose 3.7 percent to 12.28 yuan (US$1.48) on huge volume of 142.6 million shares.

Analysts said investors were betting regulators would soon allow cash-strapped brokerages to raise money through bonds, allowing them to commit more funds to proprietary trade in stock markets and thereby boosting overall liquidity.

Hongyuan Securities, one of two listed brokerages on mainland bourses, said in a statement published in newspapers yesterday it planned to apply to regulators for a bond issue.

But its yuan-denominated A shares edged down 0.75 percent to 10.54 yuan (US$1.27) as investors took profits after a surge of nearly 30 percent since mid-March, analysts said.

"Today's rally is a good signal for market trends in the medium term and we expect the composite index to rise to above 1,620 points in the next few days," said Shanghai Securities analyst Zhang Yong, referring to a key psychological support.

Investors also favored retailer stocks after Shanghai's government said it would create a retail giant by merging four of the largest retailers in the city, analysts said.

Shanghai Friendship Group Co, one of the four, was among the top B-share gainers in Shanghai with a gain of 4.97 percent.

Shanghai Number One Department Store, whose parent would also form part of the retail behemoth, rose its 10 percent daily limit to 8.14 yuan (US$0.98).

(China Daily April 15, 2003)