China's Stock Index Climbs to Three-Week High; ICBC, Banks Gain

By Zhang Shidong

Dec. 4 (Bloomberg) -- China's benchmark stock index rose to a near-three week high after a report that the government may inject additional funds into the country's largest banks boosted optimism the economy would weather the global recession.

Industrial & Commercial Bank of China Ltd., the nation's biggest publicly traded lender, rose 2.3 percent. China Merchants Bank Co., the No. 1 dual-currency credit-card issuer, gained 2.9 percent. A unit of China's $200 billion sovereign wealth fund spent 1.2 billion yuan ($175 million) to raise its holdings in the banks, the Shanghai Securities News reported today, without citing anyone.

``Sentiment is very positive on government policies and that's luring money back into equities,'' said Zhang Ling, who manages the equivalent of $1.1 billion at ICBC Credit Suisse Asset Management Co. in Beijing, declining to comment on his equities transactions.

The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, gained 30.26, or 1.6 percent, to 1,982.93 at the close, its highest since Nov. 17. About three stocks rose for each that fell on the 300-member measure.

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