* Index extends rally to 2-mth highs after strong data
* Short selling of major companies helps to cap gains
* Hong Kong share market closed for Good Friday
By Farah Master
SHANGHAI, April 2 (Reuters) – China’s key share index edged up 0.1 percent in sluggish trade by midday on Friday, extending the previous day’s rally to a two-month high although short selling of major issues such as Huatai Securities (601688.SS) under a newly launched pilot programme helped to cap the gains.
The Shanghai Composite Index .SSEC ended the morning at 3,150.268 points after rising 1.23 percent on Thursday, boosted by positive economic data and confirmation from the central bank that it would maintain a loose monetary policy.
Several key global markets including Hong Kong and the United States were closed for Good Friday.
Turnover from Shanghai’s pilot programme for margin trading, which started on Wednesday, totalled 6.59 million yuan ($965,400) on the first trading day, according to local media.
Under that programme, investors also sold 13 companies’ shares short on the first day, including China Merchants Bank (600036.SS), which fell 0.49 percent on Friday, and Huatai Securities, which eased 0.50 percent.
“The margin trading pilot programme is what is driving the market today,” said Cheng Yi, analyst at Xiangcai Securities.
Shares in SAIC Motor Corp (600104.SS), China’s biggest automaker, fell 0.38 percent after it said it returned to profit in the fourth quarter as policy incentives bolstered automobile demand in China, the world’s fastest growing major auto market. [ID:nTOE62203P]
Beverage manufacturer Kweichow Moutai Co (600519.SS) was the morning’s biggest loser, falling 5.04 percent after it announced a 2009 net profit of 4.3 billion yuan, up 13.5 percent on the year.
China’s XD Electric (601179.SS) was the morning’s most actively traded stock, pulling back 1.2 percent after surging its 10 percent daily trading limit on Thursday. The company, which listed in Shanghai in January, had been the first mainland stock to drop below its IPO price on its listing debut in five-and-a-half years. [ID:nTOE60Q0AJ]
The CSI300 Index .CSI300, which will serve as the basis for China’s first stock index futures to be launched on April 16, outperformed the broader market, rising 0.34 percent on Friday morning.
News of the launch date for index futures trading helped to spur a market rally early this week. The index covers the 300 largest companies by daily turnover and market capitalisation on the Shanghai and Shenzhen stock exchanges.
Shanghai A-share turnover rose to 82 billion yuan ($12.01 billion) from 70 billion yuan on Thursday morning. Losing Shanghai stocks edged out gainers by 441 to 430. ($1=6.825 Yuan) (Reporting by Farah Master; Editing by Edmund Klamann)