SHANGHAI - Chinese stocks rose for a second day after US reports showed employment and consumer sentiment improved, boosting confidence in a global economic recovery and driving commodity prices higher.

PetroChina Co and Zhuzhou Smelter Group Co paced gains by raw-material producers after crude oil and metal prices advanced on Wednesday. Sany Heavy Industry Co climbed 8.16 percent after Citic Securities Co said the machinery industry stands to benefit from development in rural provinces.

Poly Real Estate Group Co led builders higher as investors speculated recent losses were excessive.

"Sentiment is improving and fear of a global recession is fading," said Zhang Ling, a fund manager at Shanghai River Fund Management Co. "Chinese stocks will still be constrained as investors wait for clarity on next year's monetary policies."

The Shanghai Composite Index added 1.34 percent to 2898.26 at the 3 pm close on Thursday. The CSI 300 Index rose 1.46 percent to 3223.48.

The People's Bank of China said on Wednesday it will strengthen liquidity management and "normalize" monetary conditions after having twice this month ordered banks to hold more in reserves to curb inflation that's at a two-year high.

Chinese stocks may gain about 20 percent next year as "abundant" liquidity and profit growth overshadow the risk of inflation, Credit Suisse Group AG said.

PetroChina added 2.1 percent to 11.18 yuan ($1.68). China Petroleum & Chemical Corp gained 1.1 percent to 8.25 yuan.

Sany Heavy Industry, China's biggest maker of machinery for handling concrete, jumped 8.2 percent to 22.01 yuan as it resumed trading on Thursday after a shareholders meeting. Guangxi Liugong Machinery Co climbed 4.6 percent to 37.12 yuan, a sixth day of gains.

China's machinery industry will grow at a 15 to 20 percent annual pace in the next three to five years as the government takes steps to boost lesser-developed provinces, analysts led by Guo Yaling wrote in a note on Thursday. The China Securities Journal said this week that the government will soon announce a plan to develop the construction machinery industry.

Anhui Conch Cement Co paced gains among cement makers on speculation demand for the building material will increase at the same time as government-mandated energy curbs reduce production, driving up prices.

Anhui Conch, China's biggest cement maker, advanced 5.8 percent to 24.64 yuan, its biggest gain since Aug 30. Gansu Qilianshan Cement Group Co climbed 4.1 percent to 17.28 yuan. Tangshan Jidong Cement Co surged 8.4 percent to 21.07 yuan.

A measure of property stocks advanced 2.3 percent, its biggest gain since Nov 5 and paring its loss this month to 5 percent.

Bloomberg News

(China Daily 11/26/2010 page17)