Financials lead China stock index up 0.6 pct

SHANGHAI (Reuters) - China's main stock index rebounded from early losses to close 0.63 percent higher on Wednesday, led by financials. But most stocks fell on profit-taking before a week-long public holiday from May 1.

The benchmark Shanghai Composite Index .SSEC, which was down 0.74 percent at midday, ended at 3,743.959 points after touching a record intra-day high of 3,769.247. But losers outnumbered gainers by 522 to 345.

Turnover in Shanghai A shares was very heavy at 174.4 billion yuan ($22.6 billion), though down from a record 202.7 billion yuan on Tuesday.

With the index up 30 percent since the end of February, many believe the market is vulnerable to a pull-back.

"Many investors have decided to sell stocks before May 1," said Huatai Securities analyst Chen Jinren, adding that a spate of negative rumors -- including those about tax and interest rate policy -- had accelerated profit-taking.

But the market's string of new highs this month is encouraging buying into any dips.

Financials pulled the index up on Wednesday because of their heavy weightings. Minsheng Banking (600016.SS) gained 6.75 percent to 13.45 yuan after saying net profit jumped 47 percent in the first quarter.

Hua Xia Bank (600015.SS) shot up its 10 percent daily limit to a record 13.26 yuan, though traders said they did not know of specific fresh news behind the stock. Some traders were talking of a target above 18.0 yuan for Hua Xia.

The approach of Friday's simultaneous listing of CITIC Bank in Shanghai and Hong Kong after its $5.4 billion IPO fuelled interest in banks.

Many analysts said the 5.80 yuan issue price for CITIC Bank's A shares was high. But huge demand for the IPO -- it attracted a record 1.2 trillion yuan in retail subscriptions -- should ensure a strong if not spectacular performance on listing, they said.

"A price of 7 to 8 yuan would be rational on Friday. And the market is still so bullish that 9 to 10 yuan is possible," said Kinghing Securities analyst Zhang Yanbing.

China Life Insurance (2628.HK)(601628.SS), the country's biggest life insurer, rose 1.44 percent to 38.16 yuan after strong first-quarter earnings earlier this week.

China Life has decided to buy 50 percent of China Credit Trust, a major domestic trust firm, becoming its biggest shareholder, insurance industry sources told Reuters. But the parties have not yet settled whether the China Life group or the listed arm will make the purchase.

Yingkou Port (600317.SS) rose its 10 percent limit to 18.69 yuan after being suspended since April 5. It said it would place up to 447 million new shares at a price of at least 13.10 yuan to buy assets valued at 5.85 billion yuan from its parent.

Yangtze Power (600900.SS) jumped 8.49 percent to 14.95 yuan after the China Securities Journal reported its plan to buy part of Hubei Energy had been approved by the provincial government.

China Southern Airlines (600029.SS)(1055.HK)(ZNH.N) was up its 5 percent daily limit to 7.80 yuan after saying its first quarter net loss narrowed to 188 million yuan from 603 million yuan a year earlier.

Shanghai Worldbest Industry Development (600757.SS) soared 198 percent to 8.38 yuan after completing state share reform. It had been suspended since January 12.

Shanghai Xinhua Media (600825.SS) jumped its 10 percent limit for the second straight day to 22.03 yuan on news that Shanghai's Jiefang Daily Press Group would become its biggest shareholder in a private placement.

Steel was among the weakest sectors after leading the market up earlier this week. Baotou Steel (600010.SS), which jumped 7.04 percent on Tuesday, lost 1.64 percent to 7.78 yuan.

Hangxiao Steel (600477.SS) fell 1.80 percent to 14.72 yuan after reporting net profit fell 48 percent to 21.13 million yuan because of deterioration in margins.

The stock has been soaring on the company's claim that it won construction and engineering contracts worth 34.4 billion yuan in Angola. However, the official Shanghai Securities News reported that its 2006 accounts did not record a 170 million yuan second installment of the contracts, which was due for payment.

($1 = 7.72 yuan)