SHANGHAI stocks advanced on speculation that the government will ease monetary policy to bolster the economy.

The Shanghai Composite Index rose 0.6 percent or 14.29 points to 2,392.92, with a turnover of 45.2 billion yuan (US$7.2 billion) by the noon break.

Rail car makers rallied after the China Securities Journal reported that the country's railway investment may exceed the planned 516 billion yuan for 2012. Commercial banks started to extend loans to railway construction projects since the beginning of the second quarter, which eased capital shortages, said the newspaper.

CSR Co, China's biggest train maker, surged 3.5 percent to 4.97 yuan. China CNR Co, the second largest producer, soared 3 percent to 4.48 yuan.

The journal also said the government may do more fine-tuning and adjust its monetary policy in short notice to ease liquidity pressures.

"The better-than-expected financial data in March signals that the government may start to fine-tune the policy," said Li Huiyong, chief analyst at Shenyin Wanguo Securities. "Given the pressure of economic downturn and to ensure a soft landing, it is necessary to adjust policies to bolster the economic development."

Industrial and Commercial Bank of China, the nation's biggest lender, advanced 0.5 percent to 4.37 yuan. China Construction Bank added 0.2 percent to 4.73 yuan. And Agricultural Bank of China gained 0.4 percent to 2.72 yuan.

"Brokerages advanced on hopes the upcoming securities innovation conference next month will bring good news," said Damo Investment Co today in a note.

Citic Securities Co gained 1.4 percent to 13.48 yuan; Founder Securities Co soared 6.9 percent to 5.26 yuan; Industrial Securities Co jumped 4.5 percent to 11.91 yuan.

Source:shanghaidaily