China stocks up 1.8 pct, end 2010 down 14.3 pct

SHANGHAI Fri Dec 31, 2010 2:06am EST

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SHANGHAI Dec 31 (Reuters) - Chinese stocks rebounded close to 2 percent on Friday in thin trading and an upbeat holiday mood, finishing off a lacklustre year with the hope that 2011 will treat equity investors better.

The benchmark Shanghai Composite Index .SSEC rose 1.8 percent on the day to 2,808.1 points as stocks rose across the board, but the index still fell by 14.3 percent for the year, making it one of the world's worst performers this year as policy uncertainty hung over the market.

"The last-day rebound could partly reflect investors' optimism toward stocks in the new year as some have already started building positions," said Zhang Fan, strategist at Tebon Securities in Shanghai.

"Stocks are likely to rise next year as tightening fears have been priced in, while faster yuan appreciation could introduce more liquidity into the market."

But some worry that a slew of tightening measures that are likely to be front-loaded in the first half of 2011 could weigh on the market, with the latest Reuters fund poll showing that fund managers are cutting their suggested equity weightings over the next three months. [CN/ASSET] ($1 = 6.60 yuan) (Reporting by Samuel Shen and Jason Subler)

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