SHARES in car and chemical companies rose yesterday on expectations of strong earnings next year, helping the benchmark index to end higher.

Analysts said they expected the Shanghai index to trade in a wide range Thursday, between 5,100 and 5,300 points, because of volatile trade in heavyweight PetroChina on concerns over its high valuation.

The benchmark Shanghai Composite Index ended up 0.6 percent at 5,233.35. The Shenzhen Composite Index rose 1.7 percent to 1,433.06.

“Investors are wary of buying into bank and property developers out of concerns over upcoming macroeconomic measures, and accelerating rotational buying is taking place in sectors with a positive 2008 outlook like chemicals, cars, pharmaceuticals and military machines,” said Everbright Securities analyst Shi Honglin.

In a departure from its previous “prudent and stable” monetary policy stance, the People’s Bank of China said earlier this month it would move to a “tight” monetary policy.

Carmaker Beiqi Foton Motor rose 3 percent to 13.25 yuan (US$1.79), while Hunan Changfeng Motor ended up 3.4 percent at 16.15 yuan.

Chemical maker Shandong Haihua rose 3.4 percent to 16.93 yuan while Dymatic Chemicals jumped 5.2 percent to 25.04 yuan.

Banks ended lower. The sector has a heavy weighting in fund managers’ portfolios, and other investors expecting banking stocks to drop after year-end purchases by fund managers cashed out of banks ahead of the wave, said Haitong Securities analyst Wu Yiping.

Industrial & Commercial Bank of China dropped 1.6 percent to 7.95 yuan and Huaxia Bank fell 2.1 percent to 18.30 yuan.

PetroChina closed up 0.9 percent at 31.54 yuan. Analysts said trade in the stock would likely be volatile in the coming sessions.

(SD-Agencies)