Extended stimulus package boosts China shares

Chinese shares rebounded Thursday after the government extended tax cuts and subsidies for purchases of small vehicles and appliances to support the economic recovery. The benchmark Shanghai Composite Index edged up 14.7 points, or 0.5 percent, to close at 3,254.26. The Shenzhen Composite Index for China's second exchange added 0.7 percent to end at 1,220.02. The Cabinet said Wednesday it would continue its policies to push consumption by extending tax cuts and subsidies for purchases of small vehicles and appliances, while adjusting some measures to counter rising property prices. "Investors were encouraged as uncertainties about next year's policies on consumption were clarified," said Xu Zhiyuan, an analyst for Capital Edge Investment & Management in Shanghai. Investors worried for months that the government might withdraw subsidies and tax cuts, derailing the economic recovery, analysts said. Consumer goods makers rose on expectations for higher sales. Home appliance maker Hefei Meiling Co. gained 3.6 percent to 12.95 yuan, while appliance giant Sichuan Changhong Electric Co. jumped 3.5 percent to 6.55 yuan. Chinese liquor maker Sichuan Swellfun Co. advanced 4.5 percent to 21.09 yuan, while Shanxi Xinghuacun Fen Wine Factory Co. soared 7.8 percent to 43.03 yuan. Banks rose after slumps in previous sessions, with Industrial & Commercial Bank of China Ltd., China's biggest commercial lender, up 0.4 percent to 5.24 yuan. China Construction Bank Ltd. and Bank of China Ltd. both rose 0.7 percent — CCB to 6.04 yuan and BOC to 4.17 yuan. In the currency market, the yuan strengthened to 6.8266 to the U.S. dollar, up from Wednesday's close of 6.8281.