The benchmark Shanghai Composite Index, a major index of Chinese shares, broke 2,400 points for the first time in five years on Monday, rising 3.93 percent to close at a record 2,435.76.

The Shenzhen Composite Index closed at 6,382.60 points, up 2.25 percent or 140.4 points.

Shares in the Industrial and Commercial Bank of China emerged as the main driving force in the rises, closing at 5.21 yuan, a rise of 0.47 yuan or 9.92 percent, nearing the daily maximum of 10 percent.

Bank of China shares rose 7.5 percent or 0.3 yuan to close at 4.3 yuan. Those of the Sinopec, China Unicom, and China Merchants Bank all climbed around three percent.

Stimulated by the market heavyweights, more than 800 stocks on both exchanges have been on the rise with more than 400 on the decline.

The two exchanges have registered an aggregate turnover of 7.1 billion yuan (910 million U.S. dollars).

Analyst Li Hongyan attributed the bullish bank shares to Sunday news that China was going to adopt a unified corporate tax of 25 percent for both local and foreign-funded firms.

Companies in China currently pay a nominal rate of 33 percent, but because of tax waivers and incentives -- many initiated in the early 1980s to attract overseas capital -- foreign firms actually pay about 15 percent.

Value investors would look to bank shares as a decline in corporate tax would boost after-tax profits of domestic banks and reduce their price-to-earning ratios.

Many analysts contended the shares of the ICBC were of strategic value because of its widespread networks and growing inter-bank revenue.

ICBC net profits were expected to register a compound annual growth rate of 24.8 percent from 2006 to 2008, they said.

Source: Xinhua