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1st LD-Writethru: Chinese shares rally for 3rd consecutive day

Xinhua, July 13, 2015 Adjust font size:

Chinese shares rallied for a third consecutive trading day on Monday, following dramatic moves by the government to stabilize the market.

The benchmark Shanghai Composite Index rose 2.39 percent to close at 3,970.39 points. The smaller Shenzhen Component Index surged 4.78 percent to close at 12,614.16 points.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, climbed 5.8 percent to end at 2,683.07 points.

Winners outnumbered losers by 856 to 44 in Shanghai, and by 831 to 11 in Shenzhen. Some 900 shares jumped by their 10-percent daily limit.

More than 1,000 firms continued to suspend trading of their shares.

The combined turnover of the two bourses rose to 1.174 trillion yuan (192 billion U.S. dollars), from Friday's 1.08 trillion yuan.

The Shanghai index climbed above the 4,000-point psychological mark during the afternoon session, before retreating to close at around 3,970 points.

Chinese shares began to pick up on Thursday, after a free fall since their peak in mid-June.

On Friday, the benchmark Shanghai Composite Index leaped 4.54 percent to finish at 3,877.8 points. On Thursday, the Shanghai index soared 5.76 percent, the biggest daily rise in six years.

Before Thursday, the Shanghai index had lost about 28 percent of its value since a spectacular bull run ended with a peak of 5,178.19 points on June 12.

For fear of the market rout threatening overall financial stability, the Chinese government stepped in with measures including pouring in funds and restricting futures trading on a major small-cap index.

On Thursday, Chinese police joined the securities regulator to investigate "malicious short selling", a practice held to be a big contributing factor in the market chaos. The central bank also reiterated that it will continue to support the market's liquidity needs.

Despite the eye-catching rebound, analysts have predicted some continuing instability in Chinese stocks.

Xu Xiaoming, a market commentator, said the rebound lost some momentum in the afternoon trading session on Monday. He said he expects the market to fluctuate in the coming two trading days.

Earlier, Minsheng Securities forecast that the market will struggle at times in the near future, as it will take time to disperse market panic and rebuild confidence. Endi