Money

China shares end up 0.8%, bounce from 7-month low

(Agencies)
Updated: 2010-05-05 16:57

China's key stock index closed up 0.8 percent on Wednesday, managing a technical bounce from a seven-month low hit early in the session as concern over Greece's debt woes and weak overseas markets weighed on sentiment.

The Shanghai Composite Index ended the day at 2,857.2 points, after falling as much as 2 percent to its lowest since Sept 30.

The market had fallen seven of the previous eight sessions and is down nearly 10 percent since mid-April, hit by government measures to curb property prices and to absorb excess market liquidity, including a hike in banks' reserve requirements announced over the weekend.

However, analysts said the index had become oversold and was due for a technical bounce, with the property subindex rising 0.9 percent after slumping to a 13-month low.

"Most of the market has been oversold so we are seeing a slight rebound," said Ren Chengde, Galaxy Securities.

"We think this bounce back is reasonable but don't expect the index to make a strong breakthrough as we still don't have clarity on policy measures."

Several banks reversed earlier losses, with ICBC edging up 0.2 percent, after falling nearly 2 percent earlier in the session, while Minsheng Bank ended up 1.7 percent.

The index's 14-day Relative Strength Index rebounded to 31 by the close on Wednesday, after spending most of the session below the 30 level, which indicates the market had become oversold. The 14-day RSI was at 27 at Tuesday's close.

Gaining Shanghai stocks outnumbered losers by 804 to 102, while turnover rose to 113 billion yuan ($16.55 billion) from Tuesday's one-and-a-half-month low of 78 billion yuan.