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China Stock Market Overdue For Consolidation

The China stock market has moved higher in six consecutive trading days, gathering more than 140 points or 4.8 percent along the way. The Shanghai Composite Index now rests just beneath the 3,025-point plateau although the rally may stall on Tuesday.

The global forecast for the Asian markets is fairly rudderless, with trade uncertainties offset by rising crude oil prices. The European and U.S. markets were mixed but little changed and the Asian bourses are likely to follow that lead.

The SCI finished modestly higher on Monday as gains from the oil companies and property stocks were capped by weakness from the financial sector.

For the day, the index advanced 21.14 points or 0.84 percent to finish at 3,024.74 after trading between 3,005.69 and 3,026.24. The Shenzhen Composite Index surged 31.71 points or 1.91 percent to end at 1,689.21.

Among the actives, Industrial and Commercial Bank of China fell 0.18 percent, while China Construction Bank shed 0.28 percent, China Merchants Bank skidded 1.09 percent, China Life Insurance lost 0.44 percent, Ping An Insurance slid 0.33 percent, PetroChina climbed 1.12 percent, China Petroleum and Chemical (Sinopec) added 0.78 percent, China Shenhua Energy dipped 0.20 percent, Gemdale advanced 1.02 percent, Poly Developments soared 2.18 percent, China Vanke was up 0.67 percent, CITIC Securities gathered 0.70 percent and Bank of China was unchanged.

The lead from Wall Street offers little clarity as stocks showed a lack of direction on Monday, bouncing back and forth across the unchanged line before closing mixed.

The Dow added 38.05 points or 0.14 percent to 26,835.51, while the NASDAQ lost 15.64 points or 0.19 percent to 8,087.44 and the S&P 500 fell 0.28 points or 0.01 percent to 2,978.43.

The choppy trading on Wall Street came amid a light day on the U.S. economic front, with a lack of major data keeping some traders on the sidelines.

Traders expressed some optimism about further stimulus from global central banks, with the European Central Bank expected to cut interest rates on Thursday. Expectations for another interest rate cut by the U.S. Federal Reserve next week were also bolstered by last Friday's weaker than expected jobs data.

Crude oil prices rose sharply on Monday, riding comments from Saudi Arabia that it would continue to support output cuts by OPEC and other producers. West Texas Intermediate Crude oil futures for December ended up $1.33 or 2.4 percent at $57.85 a barrel.

Closer to home, China is scheduled to release August numbers for consumer and producer prices on Tuesday. Consumer prices are expected to rise 2.6 percent on year, slowing from 2.8 percent in July. Producer prices are predicted to sink an annual 0.9 percent after easing 0.3 percent in the previous month.

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