China shares closed higher yesterday, led by firms posting rosy first-half profits, but some investors opted for the sidelines in anticipation of new government moves to boost the flagging market.

The Shanghai composite index, grouping hard currency B shares for foreigners and yuan-denominated A shares, was 0.33 percent higher at 1,479.283 points.

The index has fallen 2.77 percent since mid-July, hit by negative factors including a rash of new stock offers and tightened bank lending after an investigation into alleged questionable loans to embattled tycoon Zhou Zhengyi, brokers said.

"Trade was very thin, with many investors preferring to remain on the sidelines. We could see a rebound later this week if we get market-positive news from the brokerage seminar," said analyst Shao Rui at Shanghai Securities.

A seminar for senior brokerage executives organized by the China Securities Regulatory Commission will be held in Beijing this week to discuss how to develop the stock market, triggering hopes the government might issue market-supportive policies.

Still, shares in companies that have posted healthy first-half profits found favour with investors.

Southeast Power, one of China's largest listed power firms, rose 1.56 percent to close at US$0.649 after the company reported a 44 percent rise in second-quarter net profit on Monday.

Appliance manufacturer Shangling Electric climbed 2.66 percent to US$0.734 after first-half net profits shot up 64 percent.

Shares in China Southern Airlines Co Ltd, the country's largest carrier, inched 0.76 percent higher to close at 3.96 yuan (US$0.48) after the carrier said July passenger traffic fell 3.9 percent year-on-year.

The figure was a sharp improvement over June passenger traffic, which slumped 55 percent on the year following the outbreak of severe acute respiratory syndrome (SARS).

Shenzhen's B share index rose 0.45 percent to 234.09 points and Shanghai's climbed 0.68 percent to 108.783.

On the foreign exchange market, China's yuan strengthened two notches to 8.2770 to the dollar yesterday, near the top end of its tightly managed range.

The yuan kept between 8.2769 and 8.2773 throughout the session after closing at 8.2772 on Monday. The central People's Bank of China enforces a trading range of 8.2760 to 8.2800. Turnover fell to US$420 million from US$480 million on Monday.

The yuan yesterday climbed to 6.9680 against 100 Japanese yen - up from 6.9762 - but softened versus the euro to 9.3993 from 9.3364. It was flat versus the Hong Kong dollar at 1.0609.

Shanghai copper futures ended largely flat yesterday, tracking the London Metal Exchange's inter-office session which traded mixed as the market awaited news of the US Fed meeting, traders said.

The most active December 2003 contract inched down 10 yuan (US$1.2) to 17,720 yuan (US$2,140) a ton, while almost all other contracts ended 10 yuan (US$1.2) to 30 yuan (US$3.6) lower. Combined volume fell to a thin 50,954 lots from Monday's active 97,690 lots.

LME three-month copper softened to US$1,758/US$1,761 a ton by yesterday's Asian trade from Monday's close of US$1,766 as investors were eying the outcome of the US Federal Reserve's policy-setting meeting, due later, traders said.

(China Daily August 13, 2003)