China shares end up for 7th day, but Wuliangye dives

SHANGHAI, Sept 9 (Reuters) - China's key stock index closed up 0.5 percent on Wednesday, rising for seven straight days, led by metal stocks, after sources told Reuters that Chinese banks' new lending in August was stronger than previously expected.

But Wuliangye Yibin (000858.SZ), one of China's top liquor makers, tumbled 6.2 percent to close at 22.60 yuan after it said in a statement that it was under investigation by the country's stock watchdog. [ID:nSHA178939]

"Wuliangye's case made jittery investors lock in profits and capped gains, hurting overall sentiment," said Zhang Qi, senior analyst at Haitong Securities in Shanghai.

But the Shanghai Composite Index .SSEC still ended up at 2,946.259 points, having now jumped more than 10 percent since it hit this year's intraday low on Sept. 1, with government policy support offsetting negative factors including profit-taking pressure and heavy supplies of new shares.

Gaining Shanghai A shares nearly matched losers by 443 to 414, while turnover rose to a relatively decent 153 billion yuan ($22 billion) from 148 billion yuan on Tuesday.

In another sign of government support for the market, the official Shanghai Securities News reported that the China Securities Regulatory Commission was slowing the pace of approvals for initial public offerings (IPO).

Chinese banks extended about 370 billion yuan ($54.2 billion) in new local currency loans in August, a touch more than 356 billion in July and topping market expectations, two sources who have seen the official data told Reuters late on Tuesday. [ID:nSP495007]

"Investors had expected worse but the actual data appears to be beating expectations," said Qian Xiangjing, senior analyst at CITIC-Kington Securities in Hanzhou.

"And helped by a string of official market-friendly measures, the index may have the opportunity to test the key 3,000-point level in coming days."

That will mark a reverse of the trend in August when the index plunged 22 percent in its second worst monthly performance in 15 years amid worries including heavy share supplies and shrinking lending. ($1 = 6.83 yuan) (Reporting by Claire Zhang and Jacqueline Wong)