But an official at the stock market watchdog, China Securities Regulatory Commission (CSRC), said she was not aware of any new B-share policies to be implemented soon.

"We have not heard of imminent new B-share policies," the CSRC official said on Thursday.

Shenzhen's B index rose 1.96 per cent to end at 233.82 points, while Shanghai's rose 1.29 per cent to 153.854.

"Rumours on new B-share policies helped push up the indices in the afternoon session," said a floor trader at a major Chinese brokerage in Shanghai. "They focused on allowing domestic investors to buy B-share IPOs."

China's B shares, launched in 1992 for foreign investors, were opened to Chinese retail investors in February last year to boost liquidity in the tiny 112-stock markets, where trade is often driven by rumours and speculative buying.

B shares have generally fallen over the past week, following a downtrend on domestic A-share markets which were under pressure of a major A share IPO by China Merchants Bank.

A shares are reserved for Chinese investors.

Merchants Bank, one of the country's most profitable, ended subscription for an A-share IPO of up to 10.95 billion yuan (US$1.33 billion) on Wednesday, the country's second largest offering ever.

A final price based on the subscription outcome has yet to be announced.

Analysts said the B-share rebound was likely to lose steam soon, as the A-share markets were weak due to more share offers in the pipeline.

"Under the pressure of a quickened pace of market expansion, share indices are likely to consolidate narrowly to seek new leads," said analyst Chang Jin of Qinghai Securities.

A slew of companies have announced plans to list, including China Southern Airlines which said on Wednesday it plans to issue up to 1 billion A shares this year pending regulatory and shareholder approval.

Baoji Titanium, based in the northern province of Shaanxi, launched a 60 million A-share IPO on Thursday to raise up to 324 million yuan (US$39 million).

"The the potential for further rises (in the B-share market) is limited," said Shao Rui, a senior analyst at Shanghai Securities.

"They are likely to move narrowly in thin volume in the near term as investors wait to look for new market leads," he said.

Shanghai's A-share index closed down 0.25 per cent at 1,721.832 points while Shenzhen's inched up 0.07 per cent to 506.67, struggling with weakness that has lasted for a week.

Shanghai's composite index dipped 3.56 points to 1,650.67. Shenzhen's counterpart index gained a slight 2.05 to close at 3,259.68.

On the B-share markets, investors bought companies expected to post strong 2001 earnings.

Shenzhen Properties Co, which has forecast a net profit jump of more than 50 per cent for last year, was Thursday's top performer. It closed up 4.59 per cent at HK$4.56 (US$0.58) on volume of 1.46 million shares.

On the foreign exchange market in Shanghai, China's yuan closed unchanged at 8.2775 against the US dollar on Thursday as dollar supply by domestic exporters met demand for the hard currency from Chinese importers, dealers said.

Turnover climbed to a healthy US$320 million from a moderate US$270 million on Wednesday.

"Dollar bids were active in the morning while the offer side finally caught up," said a Chinese dealer in Beijing.

(China Daily March 30, 2002)