Investors monitor stock price movements at a brokerage in Changchun, Northeast China's Jilin Province July 26, 2007. [newsphoto]

China's main stock index reached a new high on Thursday due to strong corporate earnings and regaining investor confidence.

The Shanghai Composite Index opened 0.55 percent higher at 4,347.78 points, breaking the previous high of 4,335.96 set on May 29.

At one point, it climbed to 4,371.51, but lost steam gradually and closed at 4,346.45, an increase of 0.52 percent over Wednesday's close, after touching an intra-day low of 4,304.19. The Shenzhen Composite Index gained 1.52 percent to 1,231.64.

The rise was mainly fueled by strong earnings in listed firms. As of Wednesday, 86 public companies have released their mid-term reports, registering a 58.28 percent growth in weighted earnings per share and an 87.09 percent rise in net profit, according to data from TX Investment Consulting Co.

Shanghai Urban Agro-Business Co., through which Haitong Securities obtained a back-door listing, jumped its 10 percent daily limit, after the brokerage said its net profit soared more than nine-fold to 2.04 billion yuan in the first half of this year on the back of a booming stock market. The stock will start to trade under the name of Haitong Securities on July 31.

CITIC Securities jumped 5.12 percent to close at 66.9 yuan per share, while Sinopec went up 0.57 percent to 14.08 yuan.

Thursday's increase followed a series of major gains over the last few sessions. In response, the number of new A-share investment accounts opened daily climbed to 115,659 on Tuesday, exceeding 110,000 for the first time in three weeks.

Trading volume on the Shanghai Stock Exchange expanded to 132.79 billion yuan from 125.68 billion yuan on the previous session, as turnover on the Shenzhen Stock Exchange went up to 73.40 billion yuan from Wednesday's 66.53 billion yuan.

Analysts are divided on the future development of the market, with some believing it will forge ahead now that it has set a new high. However, others argue that profit-taking will be heavy, exerting a downward pressure.

They also cited several other factors, including an increasing supply of stocks and the tightening of credit by commercial banks.

Red chips, companies registered and listed overseas but most of their businesses are in the Chinese mainland, are expected to return to the Shanghai and Shenzhen bourses in the next few months. That will provide more alternatives to investors and may drive down the prices, according to the analysts.

In a move that might reduce money supply in the equity market, many banks have become more discriminating in lending money to individuals, reported China Securities Journal on Thursday, citing banking sources.