GAINS in heavyweight banks helped the mainland’s benchmark stock index rebound from early losses yesterday, but the market’s rise was capped by concerns over a high inflation rate and potential damage from an earthquake that hit the country’s southwest.

The China Earthquake Administration said yesterday an earthquake measuring 7.6 on the Richter Scale struck Wenchuan County in the southwestern province of Sichuan. The quake, which occurred around 30 minutes before the stock markets closed, was also felt in Beijing and part of Shanghai.

The Shanghai Composite Index, which tracks both A and B shares, ended up 0.4 percent at 3,626.98 after trading between 3,521.88 and 3,668.86. The Shenzhen Composite Index rose 1.3 percent to 1,111.97.

Analysts expect the Shanghai index to move in the 3,400-3,800 band this week. They said shares of companies located in the southwestern region may fall in the coming sessions due to the earthquake.

“I think the market has digested most of the negative impact from the CPI data, but it’s difficult to say if the correction in the market is over,” said Chen Jinren, an analyst at Huatai Securities.

China’s consumer price index in April rose 8.5 percent from a year earlier, accelerating from March’s 8.3 percent increase, the National Bureau of Statistics said yesterday.

“Investors were rebuilding positions after the official data confirmed market rumors, but concerns that the high inflation won’t ease in the short term would limit buying interest,” said Amy Lin, an analyst at CSC International Holdings.

Analysts said the central bank would likely implement more tightening measures, such as another increase in banks’ reserved requirement ratio or benchmark interest rates, to curb inflation.

Heavyweight banks rose on bargain hunting. (SD-Agencies)