Tax cut boosts China share prices

The biggest possible daily rise in Shanghai shares is 10%

China's main share index has seen one of its biggest daily gains after the government cut taxes on share trading.

The Shanghai Composite Index rose 9.3%, or 304.7 points, to close at 3,583.0 after tax was cut from 0.3% to 0.1%.

It is a clear sign that the government wants to support share prices, which had fallen 50% from their peak levels in October 2007.

Analysts said that Chinese share prices were often more dependent on government measures than the state of the economy.

"The lowering of stamp duty is among the most aggressive steps the government could have taken to improve sentiment," said Jing Ulrich at JPMorgan Chase.

The cut reversed the increase imposed by the government in May 2007, when it was trying to cool surging share values.

Thursday's rise was close to the biggest possible, because individual Shanghai shares are limited to 10% daily increases.