China's stocks advanced to a high, completing a record month for the CSI 300 Index, after companies including Angang Steel Co. reported higher earnings and JPMorgan Chase & Co. raised its economic growth forecast for the nation.

"A large number of companies have reported good earnings for the first quarter,'' said Fan Dizhao, who helps manage about $1.8 billion at Guotai Asset Management Co. in Shanghai. "It's almost certain that the 2007 earnings will rise 30 to 40 percent for all listed companies as the economy keeps growing.''

Citic Securities Co. jumped by the 10 percent daily limit after brokerages' new account openings picked up last week, while Aluminum Corp. of China Ltd., known as Chalco, surged as much as three times on its debut in Shanghai. Limiting gains, China Merchants Bank declined after the central bank increased the amount of deposits lenders have to set aside as reserves.

The CSI 300 Index, which tracks yuan-denominated A shares listed on the Shanghai and Shenzhen stock exchanges, rose 88.19, or 2.5 percent, to close at 3558.71. The gauge jumped 28 percent in April, the most among 90 global stock benchmarks tracked by Bloomberg and the biggest monthly increase since the benchmark was introduced in April 2005.

Demand for stocks is strengthening as a rallying market, higher earnings and an improving economy draw investors. The nation's mutual fund assets jumped 33 percent to 1.14 trillion yuan during the first quarter, taking in about 165 billion yuan of bank savings, according to Z-Ben Advisors Ltd., a Shanghai- based industry researcher.

`Very Expensive'

Investors including Mark Mobius, who helps oversee $30 billion as managing director of Templeton Asset Management, says China's stocks are ``very expensive'' and a fall is coming. The CSI 300 is valued at 40 times earnings, the most among 14 Asia- Pacific markets tracked by Bloomberg. India's Sensitive Index is the second highest at 24 times.

So far, there's no sign of a let-up. More than 1.2 million new trading accounts were opened at China's brokerages in the first four days of last week, with a daily record of 311,110 having been set on April 24, according to the latest figures published on the Web site of the China Securities Depository and Clearing Corp.

Citic Securities, the nation's biggest publicly traded brokerage, surged 5.36 yuan to 59.06. Hong Yuan Securities Co., the smaller of the nation's two listed brokerages, jumped 3.37 yuan, or the 10 percent daily limit, to 37.05.

Earnings, Growth

"There is talk about the stock market bubble, but it's difficult to say it will burst for sure given that interest rates are so low and individuals don't have many alternatives to invest,'' said Hu Xiaodong, who helps manage about $2 billion in Chinese stocks at Martin Currie Investment Management Ltd. in Shanghai. ``The strong economy and optimistic 2007 company earnings outlook will support the market.''

Angang Steel, China's third-largest steel producer by output, rose 0.35 yuan, or 2 percent, to 17.64. First-quarter profit more than doubled to 2.4 billion yuan ($311 million) and the company forecast earnings this half will be up as much as 70 percent from the same time last year.

Anhui Conch Cement Co., China's biggest maker of cement, climbed 1.12 yuan, or 2.9 percent, to 40.48 yuan after net income surged 36 percent to 213 million yuan in the first quarter. Hainan Airlines, a Chinese carrier partly owned by U.S. billionaire George Soros, added 0.15 yuan, or 2 percent, to 7.83 after the company said first-quarter profit more than tripled to 51.2 million yuan.

JPMorgan raised its 2007 economic growth forecast for China to 10.8 percent from 10 percent, according to a research note published today. The revision comes after growth unexpectedly accelerated to 11.1 percent in the first quarter, beating the 10.4 percent pace forecast in a Bloomberg News survey of economists.

Banks Decline

China Merchants Bank, China's sixth-largest lender, lost 0.03 yuan, or 0.2 percent, to 19.47.

China's central bank yesterday ordered banks to set aside more money as reserves for the seventh time in 11 months to help keep spending and investment in check. Lenders must put aside 11 percent of deposits starting May 15, up from 10.5 percent.

"The government is trying to reduce liquidity in the economy,'' said Fan. ``Banks may have to cut loans.''

Huaxia Bank Co., a Chinese lender partly owned by Deutsche Bank AG, fell 0.14 yuan, or 1 percent, to 13.33. UBS AG initiated coverage of the stock with a recommendation that investors ``reduce'' their holdings, according to a research note published today.

The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, rose 2.2 percent to 3841.27. The Shenzhen Composite Index, which covers the smaller one, added 1.6 percent, to 1064.77.

Chalco, the nation's biggest maker of the lightweight metal, rose as high as 20.07 yuan on the first day of trading in Shanghai and ended at 18.51 yuan. The shares were issued at a price of 6.60 yuan as part of a takeover of two units, Shandong Aluminium Industry Co. and Lanzhou Aluminum Co.

(Photo source:Google/China's stocks advanced to a high)