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1st LD-Writethru: China's major stock index edges up after inflation data

Xinhua, February 14, 2017 Adjust font size:

Major Chinese stocks rose for the fifth straight trading day Tuesday as official consumer inflation data showed economic growth is firming and liquidity stabilizing.

The benchmark Shanghai Composite Index went up 0.03 percent to end the day at 3,217.93 points.

The Shenzhen Component Index closed 0.06 percent lower at 10,264.92 points. The ChiNext Index, which tracks China's NASDAQ-style enterprises, lost 0.22 percent to close at 1,909.40 points.

Turnover shrank to 431 billion yuan (about 63 billion U.S. dollars) from 484 billion yuan the previous trading day.

Analysts agreed that the higher-than-expected producer price index (PPI) and consumer price index (CPI) figures for January reinforced views that economic growth is firming up, putting investors at ease.

The PPI, which measures costs of goods at the factory gate, jumped 6.9 percent year on year last month, beating market expectations of 6.5 percent and marking a five-year high, according to the National Bureau of Statistics (NBS) Tuesday.

The jump was mainly driven by the carry-over effect of last year's price changes and rising prices of raw materials and of oil and gas in the global market, according to NBS senior statistician Sheng Guoqing.

Tuesday's data also showed the CPI grew 2.5 percent year on year last month, fractionally above market expectations of 2.4 percent.

The pace quickened from the 2.1 percent rise in December as the Lunar New Year Holiday pushed up food, transport and travel expenses, according to Sheng.

Moreover, China's monetary policy in 2017 is set to be "prudent and neutral" to keep appropriate liquidity levels and avoid large injections.

On Monday, the central bank injected 100 billion yuan into the financial system through open market operations to offset the impact of maturing securities. On Tuesday, the bank quickly drained 100 billion yuan from the market through reverse repos.

Construction materials, iron and steels as well as Belt and Road Initiative-related shares, led the rises Tuesday. Xinjiang Tianshan Cement surged by the daily limit of 10 percent to close at 12.9 yuan per share.

China plans to host a Belt and Road forum for international cooperation in Beijing in May on interconnected development. Endi