China shares edge up 0.1 pct, earnings support

Reuters - Monday, October 26

* Peking University report sees Q4 GDP growth 10.6 pct

* Strong earnings expected in financial, property sectors

* Health-related shares up, travel shares hit on US flu steps

SHANGHAI, Oct 26 - China's key stock index edged up 0.06 percent on Monday with blue chips firmer on expectations of upbeat earnings while health-related shares rose and travel shares sank after the United States declared H1N1 flu a national emergency.

The Shanghai Composite Index <.SSEC> ended at 3,109.737 points, after posting its highest close in 10 weeks on Friday.

Hong Kong's financial markets were closed on Monday for a local holiday. Hong Kong stocks rose 1.71 percent to a 14-month closing high on Friday as shares of financial firms rebounded and with abundant liquidity building investor confidence. [ID:nHKG286791] Losing Shanghai A shares outnumbered gainers by 539 to 389, while turnover was at 76 billion yuan , unchanged from Friday morning.

"The economic recovery in the fourth quarter is likely to be much better than expected, earnings in the third quarter are upbeat and the index is likely to post gains step-by-step," said Wen Lijun, an analyst at Nanjing Securities.

China's economic recovery has consolidated after performing better than expected, although China will stick to its active fiscal policy and appropriately loose monetary policy, Vice-Premier Li Keqiang said on Monday. [ID:nBJC002368]

A report released by Peking University also said China's economy was expected to grow 10.6 percent in the fourth quarter and the consumer price index to rise 0.5 percent, with domestic demand growing rapidly and foreign trade continuing to recover.

China Life <601628.SS> climbed 4.31 percent to 31.68 yuan ahead of the release of its third-quarter earnings after the market's close. Ping An Insurance <601318.SS>, which is due to report on Tuesday, rose 2.31 percent to 59.85 yuan.

Property developer China Vanke <000002.SZ> rose 0.72 percent to 12.56 yuan after saying its net profit in the first three quarters rose 29.9 percent from a year ago to 2.96 billion yuan. [ID:nPEK279162]

Health-related shares outperformed while travel shares were hit hard after U.S. President Barack Obama declared 2009 H1N1 swine flu a national emergency over the weekend. [ID:nN24139386]

Guilin Layn Natural Ingredients <002166.SZ>, a health food products maker, surged by its 10 percent daily limit to 43.66 yuan while China International Travel Service <601888.SS> sank 4.32 percent to 16.39 yuan.

Metal shares were firmer on strong commodity prices, with Yunnan Chihong Zinc <600497.SS> gaining 5.04 percent to 31.68 yuan as zinc prices hit a 17-month peak.

China's Yanzhou Coal Mining <600188.SS> jumped 6.09 percent to 20.91 yuan after saying it had won conditional approval from Australia's regulatory authority after resubmitting its application for the purchase of Felix Resources Ltd <FLX.AX>.