China's stocks rose & pushing up the benchmark by most in two months

China's stocks rose, pushing up the benchmark by most in two months, after the central bank refrained from increasing interest rates and government reports showed the economy is resisting adjustment policies.

PetroChina Co. and Jiangxi Copper Co. led an advance in commodity stocks after China International Capital Corp. said material companies benefit from an environment of faster inflation. Poly Real Estate Group Co. gained more than two weeks after the central bank ordered banks to set aside more reserves instead of increasing borrowing costs as investors had speculated. Offshore Oil Engineering Co. and China Oilfield Services Ltd. jumped 10 percent cover of every day as the Shanghai Securities News said ocean engineering be included in a development plan.

The decision not to raise rates is very positive news, "said Zhen, who helps manage 301 million U.S. dollars in Shanghai Huili Asset Management Co." The Central Bank will be very cautious about interest rates. "

The Shanghai Composite Index, which remains the largest stock exchanges in China, rose 81.91, or 2.9 percent, to 2922.95 at the close 3 pm, the biggest gain since Oct. 15. The CSI 300 Index added 3.1 percent to 3,261.06.

The Shanghai index has lost 7.5 percent since reaching a peak almost seven months, on November 8 on concern that monetary tightening to curb economic growth. The measure has fallen 11 percent this year, the worst performance in Asia, as the central bank twice last month ordered banks to set aside larger reserves after raising rates in October, the first increase since 2007.

"Major correction" n

Measures of energy and materials shares rose 5.4 percent and 4.4 percent respectively, the gains of the second and third highest among the CSI 300's 10 industry groups.

PetroChina, the nation's largest oil company, rose 4.4 percent to 11.95 yuan. Jiangxi Copper, China's largest producer of the metal, raised the limit from 10 percent to 41.42 yuan. Tongling Nonferrous Metals Group Co., the second largest, advanced 8.6 percent to 30.84 yuan.

materials companies already exceed the supply of basic materials is limited while demand is inelastic, Hong Hao, a strategist at the Beijing-based CICC global equity, wrote in a report released today. China stocks is not likely to have a "significant correction" in the short term, as economic data November erase concerns about economic growth, analysts at the CICC including Zhenhai Hou wrote in a separate note.

The data showed the economy is resisting government curbs. The industrial-production growth accelerated to 13.3 percent last month from a year earlier, exceeding economists' estimates, the median of 13 percent. Urban fixed asset investment also grew at a faster pace, rising 24.9 percent in the first 11 months of 2010. Retail sales gained 18.7 percent in November.

Rate Outlook

called cyclical stocks with medium and large capitalizations, such as nonferrous metal producers and financial companies will recover if the central bank raising rates before the end of the year, CICC, said in the report.

An indicator of property stocks advanced 3.2 percent today. Poly Real Estate, the second China's largest developer by market value, rose 4.5 percent to 12.59 yuan. China Vanke Co., the largest, rose 3.7 percent to 8.40 yuan. Gemdale Corp., the fourth-largest, rose 2.4 percent to 5.94 yuan.

Consumer prices rose more than expected 5.1 percent over the previous year, statistics showed a report of the weekend. the producer price inflation was 6.1 percent, up from one of 28 economists surveyed by us had expected.

The statistics office has brought forward the publication of economic data to December 11, 1913 December, indicating that some economists like Glenn Maguire, Societe Generale SA for a rate increase could come as early as this weekend. Instead, the central bank increased reserve requirements by 50 basis points from December 20, the third increase in five weeks.

Oil Equipment

"It's a wise political move by regulators, and some strong medicine to prevent a short-term severe bubble burst later," according to Sandy Mehta, chief investment officer of Hong Kong Investment Managers value.

China will not raise rates, as inflows from foreign fuel and exacerbate inflation, Huili Asset said, echoing comments made by Wu Xiaoling, a former central bank deputy governor, at a conference of hedge funds Shanghai on 11 December.

Offshore Oil Drilling drive more offshore oil producer in the country increased 10 percent to 7.95 yuan. China Oilfield, which has the same parent as Offshore Oil, rose 10 percent to 24.74 yuan, the highest since May 2008.

China could announce a five-year development plan for the advanced manufacturing industry in the nation team, which includes aviation, aerospace, high-speed rail, ocean engineering and intelligent devices, Shanghai Securities News reported today, citing an unidentified person helped draft the plan.

Increase the rate of positive

Goldman Sachs Group Inc. said it would "fundamentally positive" if China raises lending and deposit rates soon to curb inflation amid the potential recovery of U.S. economy in 2011.

Investors want to see higher interest rates, according to Hugh Simon, co-manager of the Dreyfus Greater China Fund. Simon said in an interview on Television that China likes technology, industrial and consumer stocks.