Shanghai's share-price index climbed today, thanks to encouraging performances among airlines and real-estate developers which gained on the back of a stronger yuan.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, increased 0.21 percent, or 11.25 points, to 5,272.81 at 3pm today. The index opened at 5,265 points, 3.44 points lower that it closed at 5,261.56 last Friday.

Today is the first day after a four-day trading suspension for the New Year's Day holiday.

Winners in the Shanghai market outnumbered losers 699 to 63 and 84 were unchanged.

The Shenzhen Composite Index, which covers the smaller mainland stock market, was up 1.76 percent, or 25.41 points, to 1,472.44.

Air China, the world's biggest airline by market value, gained 8.05 percent, or 2.21 yuan (30 US cents), to 29.65 yuan and China Eastern, the nation's third-largest carrier, jumped 1.32 percent, or 0.28 yuan, to 21.57 yuan.

China National Aviation Holding Co, the parent of Air China, yesterday said the price offered by China Eastern to Singapore Airlines was inadequate and asked both companies to renew talks. China National holds about 10 percent of China Eastern.

Shimao Property Co, a Shanghai developer, surged 9.85 percent, or 2.02 yuan, to close at 22.52 yuan and North Star Co, a developer in Beijing, enjoyed the daily cap of 10 percent, or 1.42 yuan, to 15.58 yuan.

The rally in the property sector suggests investors may have shrugged off the prospect of more tightening policies this year. News reports quoted the governor of China's central bank as saying the country will take measures to slow economic growth and curb liquidity.

China's central bank reiterated its pledge to maintain a "tight'' monetary policy in 2008, continuing to use "balanced'' measures to manage the economy, said Zhou Xiaochuan, the governor of the People's Bank of China, in a New Year message on the bank's Website on Saturday. The bank will further control liquidity, Zhou added.

The tight monetary prospect helped the Chinese currency hit a record high today, which boosted airlines and developers.

The yuan rose as much as 0.13 percent to 7.2948 to the US dollar in Shanghai today, the strongest since the end of a peg to the dollar, according to the China Foreign Exchange Trade System.

A stronger yuan lowers the repatriated value of airlines' debts denominated in foreign currencies while developers and lenders also benefit as their yuan-denominated assets will be more valuable.

But some banks and securities stocks were hurt by the possible tight policies.

Citic Securities, China's biggest publicly traded brokerage, retreated 3 percent, or 2.68 yuan, to 86.59 yuan and Haitong Securities also shed 2.24 percent, or 1.23 yuan, to finish at 53.69 yuan.

Industrial and Commercial Bank of China, the nation's biggest lender, lost 0.62 percent, or 0.05 yuan and China Merchants Bank was down 2.09 percent, or 0.83 yuan, to 38.80 yuan.

China raised interest rates six times and the reserve ratio 10 times last year to ease inflation, which accelerated at the quickest pace since 1996.

Elsewhere, China Petroleum and Chemical Corp, Asia's biggest oil refiner, also known as Sinopec, lost 0.94 percent, or 0.22 yuan, to close at 23.21 yuan and PetroChina, the nation's biggest oil producer and a key heavyweight in the market, was down 1.23 percent, or 0.38 yuan, to 30.58 yuan.

Sinopec said last Friday it will buy 3.66 billion yuan of assets and gas station operation rights from its parent to expand its refined oil retail network.

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