Chinese shares edged up on Thursday, comforted by words the country's top market regulator is considering cutting or canceling the stock dividend tax.

The Shanghai Composite Index was up eight points, or 0.34 percent, to close at 2,350.14. In Shenzhen, the market fell 0.13 percent, or 10.11 points, to close at 7,817.05.

Aggregate turnover reached 43.4 billion yuan (6.3 billion US dollars), slightly lower than 47.2 billion yuan on Wednesday.

Nearly half of the stocks dropped on the two bourses. In Shanghai, 380 stocks rose while 401 fell; in Shenzhen, 351 issues rose while 296 fell.

"The tax-cut policy, once put into action, would attract long-term investment into the market," said Galaxy Securities analyst Li Feng.

Market investors have to pay 20 percent of the dividend income for tax, according to the current regulations.

Oil companies declined amid concerns that the state-set refined oil prices and higher world crude oil prices would pare their earnings.

PetroChina, the country's largest oil company, lost 0.69 percent to 12.97 yuan after reporting fuel price caps and windfall taxes led to a 34.5 percent fall in first half net profit. Sinopec, Asia's top oil refiner, was down 0.79 percent to 10.11 yuan.

Coal producers, however, rose as higher oil prices would increase demand for the alternative fuel, analysts said.

China Shenhua, the country's top coal producer, was up 1.67 percent to 27.35 yuan. Yanzhou Coal Mining Company rose 3.37 percent to 13.79 yuan, while Datong Coal Industry Co. gained 2.29 percent to 15.65 yuan.

Steelmakers gained as investors bet on a steel price increase. "The steel price is likely to rebound in the following two months, boosted by increasing fixed asset investments on prospect of monetary policy relaxation," CITIC Securities analyst Zhou Xizeng said.

Baosteel added 1.29 percent to 6.28 yuan. Shares of Wuhan Iron and Steel Corp. increased 1.89 percent to 7.02 yuan while Angang Steel Company stocks edged up 0.22 percent to 9.07 yuan.

Tourism shares also increased after the government announced on Wednesday that it would boost the industry in a bid to increase employment.

China United Travel gained 5.26 percent to four yuan, while Xi'an Tourism (Group) Co. rose 5.53 percent to 4.2 yuan.

(Xinhua News Agency August 29, 2008)