Chinese shares gained on Thursday morning after losing 2.94 percent from previous close, boosted by 6 percent rebound in the Hong Kong market.

The benchmark Shanghai Composite Index closed at 1,739.81 points, up 20 points or 1.16 percent from the previous finish.

The smaller Shenzhen Component Index ended at 5,885.41 points, up 86.75 points, or 1.50 percent.

The central bank announced interest rate cut by 0.27 percentage points on Wednesday night to spur economic growth amid fears of a global recession that would hit its vital exports.

It was the third such moves in six weeks which highlighted government's resolution to stimulate domestic consumption and bolster the recessive stock and property market.

However, analysts remained cautious about the positive impacts of the rate cuts. "Relaxed monetary policy can not boost the stock market without the coordinated efforts of the proactive fiscal policy. The direct positive impacts of rate cuts will be limited." according to a report released by the Shengde Securities.

Up to 70 percent of the property shares increased following the government boost measures. China Vanke was up 2.54 percent to 6.05 yuan (US$0.88). Poly Real Estate Group Co. closed 2.54 percent higher at 14.15 yuan.

Securities shares led the gains after China Securities Regulatory Commission clarified that the pilot plan of margin trading and short selling was still underway. Citic Securities rose 4.13 percent to 18.41 yuan. Haitong Securities climbed 2.57 percent to 19.96 yuan.

Coal stocks gained after crude prices rose more than 7 percent to US$67.50 in New York Merchantile Exchange on Wednesday. China Shenhua, the country's major coal producer was up 3.51 percent to 17.42 yuan. Datong Coal Industry closed at 11.90 yuan, up 6.25 percent.

Gainers outnumbered losers by 459 to 353 in Shanghai and 405 to 294 in Shenzhen.

(Xinhua News Agency October 30, 2008)