China stocks at highest in 2 weeks as central bank seeks to stabilize yuan

SHANGHAI: Shares in China ended at two-week highs on Monday, lifted by a stronger yuan after a tweak in the central bank's management of the currency boosted airline stocks and other firms with heavy dollar exposure.

The Shanghai Composite index closed up 1.9 per cent at 2,780.90, its biggest daily per centage gain since August 7.

China's blue-chip CSI300 index ended 2.4 per cent higher, while the financial sector sub-index rose 1.7 per cent.

The consumer staples sector gained 3.9 per cent, while the real estate index was up 4.2 per cent and the healthcare sub-index rose 3.9 per cent.

Consumer, healthcare and real estate firms have suffered during a market slump in recent weeks, dogged by a vaccine scandal that has undermined consumer confidence, and concern over stepped-up property controls.

The yuan hovered at a 2-1/2-week high against the US dollar on Monday after China's central bank revived a "counter-cyclical factor" in its daily fixing to support the currency, arresting a record 10-week slide that has rattled global markets.

The yuan was quoted at 6.8167 per US dollar, 23 pips firmer than the previous close of 6.819.

Airline shares were among the winners on Monday as investors bet that a stronger yuan would boost their bottom lines. China Southern Airlines gained 4.5 per cent and Air China was up 3.3 per cent.

A broader index of transport firms gained 1.9 per cent.

The smaller Shenzhen index rose 2.5 per cent and the start-up board ChiNext Composite index ended 3 per cent higher.