Chinese share prices rose sharply on Wednesday as the benchmark Shanghai Composite Index went up 2.7 percent, or 113.64 points, to 4,323.97.

Analysts said security companies and banks boosted the index, making it the second highest yet, just below the record of 4,335.96 points set on on May 29.

The index has climbed by more than 400 points since the government announced its major economic figures for the first half year last Thursday.

The Shenzhen Component Index on China's smaller stock market rose 1.49 percent, or 212.1 points, to 14,403.08 points on Wednesday.

About 1,300 stocks of the 1500-plus listed companies on the two bourses went up. Security companies saw sharp rises due to good earnings in the first half.

Banks also led the advance. The Bank of Nanjing and the Bank of Ningbo, two newly listed city banks, both rose to the daily limit of 10 percent.

The combined turnover of the nation's two bourses shrank to 196.3 billion yuan from 218.2 billion yuan on Tuesday.

An analyst with Guangfa Securities said the two major indices would set a new record as the Shanghai Composite Index and the Shenzhen Component Index were only respectively 56 points and 249 points lower than the highest point on May 29.

The analyst said that led by rises driven by banks and property companies, stocks outside the two sectors remained at the initial stage of a surge.

Chinese investor confidence appeared to be returning as the number of new accounts of A share stocks rebounded to 107,300 on Monday. The number had been below 100,000 since March 12.

Facing robust growth in the first half, the government announced an interest rate hike and lower interest tax on Friday to cool the economy.

As investors had braced themselves for the measures, they did not panic on the news. Instead, more investors and capital came into the market.

(Xinhua News Agency July 26 2007)