China stocks rebound after volatile day

SHANGHAI, China (AP) -- China's main stock index in Shanghai rebounded to end higher after dropping to its lowest level in nine months amid mounting worries over a a possible U.S. recession.

The benchmark Shanghai Composite Index closed at 3,804.05, up 1.1 percent from the previous day. During morning trade, though, the index plunged 245.27 points, or 6.5 percent, to 3,516.33 -- its lowest level since June 7 last year.

"Don't expect too much out of this rebound. Market sentiment is still quite dismal," said Wei Daoke, a senior analyst at Shenyin & Wanguo Securities Research Institute.

The benchmark is still down about 28 percent so far this year.

The Dow Jones Industrial Average fell 2.36 percent to 12,099.66 on Wall Street overnight, adding to regional jitters over the U.S. economic outlook, analysts said.

The morning's plunge was led by oil and gas giant PetroChina, which accounts for about a quarter of the Shanghai index's value. PetroChina's shares plunged 6.73 percent in the morning but regained some lost ground to close down 2.3 percent at 22.06 yuan.

Financials bounced back after falling early in the day. Industrial & Commercial Bank of China gained 2.1 percent to 5.77 yuan, after slipping 2.8 percent in the morning; China Life Insurance closed 0.2 percent lower at 31.99 yuan after dropping as much as 5 percent earlier in the day.

Aluminum Corporation of China rose 1.4 percent to 23.25 yuan.

The approval by shareholders of Shanghai Pudong Development Bank of a refinancing plan that will result in up to 800 million yuan (US$114 million;euro72.7 million) worth of new shares coming into the market overshadowed the afternoon rally, Wei said.

Chinese stocks have languished in recent weeks as billions of new shares have flooded into the market following the expiry of lockup periods for initial public offerings and shareholding reforms.

Mid-sized lender Shanghai Pudong Development Bank earlier scaled back its fundraising plans amid signs the market was unlikely to welcome massive new share issues. The bank's shares gained 6.5 percent Thursday to 34.70 yuan.

Gold miners fell after prices of the metal dropped in overseas markets. Zhongjin Gold hit the 10 percent daily downside limit at 171.85 yuan. E-mail to a friend

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