China Stocks Rise First Time in Week on Manufacturing Outlook; Banks Rally

China’s benchmark stock index rose for the first time in five days after a report showed the nation’s manufacturing may expand for the first time in four months and on easing concerns over the European debt crisis.

China Minsheng Banking Corp. led gains for lenders as Barclays Plc forecast “strong” third-quarter industry profit growth and European leaders outlined plans to aid banks. Jiangxi Copper Co. and coal producer China Shenhua Energy Co. climbed at least 1 percent after a preliminary index of purchasing managers signaled expansion. A gauge of startup companies slumped to a record low after Premier Wen Jiabao said the government would continue to maintain tight monetary policies.

“Europe’s progress towards solving the debt crisis will help boost sentiment on the market although there will be lots of twists and turns before the issue is finally addressed,” said Wu Kan, a fund manager at Dazhong Insurance Co., which oversees $285 million. “A stocks’ rebound will be limited as we face uncertainty such as downward earnings revisions.”

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, rose 8.02 points, or 0.4 percent, to 2,325.30 at the 11:30 a.m. local-time break. About nine stocks dropped for every five that advanced. The CSI 300 Index (SHSZ300) climbed 0.7 percent to 2,524.45, led by financial stocks.

The Shanghai Composite slid 4.7 percent last week, the biggest weekly loss in five months, after the statistics bureau said the nation’s economy grew at the slowest pace in two years in the third quarter. The gauge slumped 17 percent this year after the central bank has raised interest rates three times in 2011 and ordered lenders to set aside a bigger portion of their deposits to curb inflation that’s near a three-year high. It’s valued at 10.8 times estimated earnings, the lowest on record, according to weekly data compiled by Bloomberg. (Bloomberg)