China shares gain on bargain-hunting, shrug off interest rate hike

Chinese stocks rose Friday, though property developers declined after the central bank announced an interest rate hike, the country's sixth for this year.

The benchmark Shanghai Composite Index gained 1.2 percent, or 58.24 points, to 5,101.77. The Shenzhen Composite Index rose 1.4 percent to 1,375.89.

The announcement late Thursday of a hike in the benchmark one-year loan rate, by 0.18 percentage point to 7.47 percent, was expected and property developers' losses were limited because they had fallen in anticipation of the move, analysts said.

China Vanke dropped 0.3 percent to 28.30 yuan after shedding 14 percent over the past two weeks, while Poly Real Estate Group fell 1.6 percent to 60.52 yuan after having lost 13 percent over the same period.

Mutual funds were bargain-hunting after resuming selling to new subscribers after a two-month suspension, analysts said.

"Notice that blue chips are up today. This is because large mutual funds ... are buying blue chips," said United Securities analyst Yang Weicong.

Bank of Communications gained 1.2 percent to 14.92 yuan, Air China rose 3.7 percent to 25.99 yuan and Aluminum Corp. of China jumped 3.4 percent to 38.98 yuan.

PetroChina was virtually flat, edging up 0.1 percent to 30.53 yuan.

"The consensus is generally that the stock should be priced at 30 yuan," said CSC International Holdings strategist Amy Lin.

In currency dealings, the U.S. dollar was at 7.3624 around 0730 GMT on the over-the-counter market, down from Thursday's close of 7.3694.

During the day, it dipped to 7.3550, its lowest level since the current trading system was set up in 2005.