THE Shanghai Composite Index rose in the morning session on improved liquidity and surging oil prices.

The key index gained 0.32 percent, or 7.6 points to 2,417.15 by the noon break, extending its gains to the sixth straight day. Turnover stood at 52.3 billion yuan (US$8.3 billion).

The reserve requirement ratio for large commercial banks now stands at 20.5 percent, as the Chinese central bank announced a cut in RRR last Saturday by 0.5 percent points to be executed today. Economists estimate that 400 billion yuan would be pumped to the financial system.

China's seven-day repurchase rate, a gauge of liquidity available in the financial system tumbled today, indicating that the cash crunch has been eased by the execution of the ratio cut.

"The central bank added 2 billion yuan into the system this week through its open-market operations," said Zhou Yan, a financial analyst at Bank of Communications.

Property developers are cheered by the easing credit crunch, and recent market speculation that local governments are taking measures to relax property curbs. The property sector surged 3.02 percent on average by the noon break. The nation's biggest developer, Vanke China Co jumped 1.59 percent to 8.32 yuan. Poly Real Estate Group, the second-largest developer soared 2.21 percent to 11.55 yuan.

Iran said on Monday that it had stopped oil sales to the West, as sanctions against the country tightened. The oil price will continue its rally on Iran tensions next week according to a Bloomberg survey.

Chinese oil refiners gained on the news. Sinopec Shanghai Petrochemical Co, a unit of China's biggest refiner, jumped 1.11 percent to 6.4 yuan. PetroChina Co, the nation's second largest refiner, added 0.19 percent to 10.33 yuan.