China Stocks Gain, Reversing Losses; Merchants Bank, Vanke Rise

By Zhang Shidong

Aug. 1 (Bloomberg) -- China's stocks rose, erasing earlier losses, after China's President Hu Jintao said the country needs to maintain ``steady and fast'' growth.

China Merchants Bank Co. and China Vanke Co. led the gains. Hu's televised address, coming exactly one week before the start of the Olympic Games, spurred a 2 percent rebound in the benchmark CSI 300 Index, which had been trading 2 percent lower. The gains pared the measure's weekly decline to 2.7 percent.

``We have made it clear that the goal of our macroeconomic regulation and control are to maintain steady and fast economic growth on the one hand and at the same time to control excessively growing prices on the other,'' Hu told foreign reporters.

The CSI 300, which tracks yuan-denominated A shares listed on China's two exchanges, gained 49.26 to 2,853.46 as of 2:35 p.m.

The index has lost 47 percent this year, the worst performer among the world's top 20 benchmark indexes, on concern rising fuel prices and accelerating inflation will hurt earnings.

The central bank this year ordered lenders to set aside a record amount in reserves to tame rising consumer prices after increasing interest rates six times in 2007. Inflation climbed to 7.9 percent in the first half of this year, compared with 4.8 percent for all of 2007, government figures show.

China's economic expansion slowed for the fourth straight quarter in the three months through June as U.S. demand for exports faltered.

Merchants Bank, the nation's biggest dual-currency credit- card issuer, rose 3.6 percent to 24.48 yuan. Vanke, the nation's biggest listed property developer, gained 2 percent to 8.67 yuan.

To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net