Chinese stocks rebound for 2.6% gain

Chinese stock prices, having slipped by as much as 7% in early trading Tuesday, rebounded to close up 2.6% at 3,767 points, the Financial Times reported. Despite official reassurances of long-term market strength, the 7% plunge that met the increased stamp duty last Wednesday, and which was exacerbated by a further 8% fall on Monday, looked set to continue. The late swing back into positive territory was fueled by various unconfirmed rumors including an impending abolition of sales tax on share purchases (leaving only share sales taxable), a public ruling out of a capital gains tax on stock trading and the injection of public funds into the market. Further talk, denied by several parties, suggested that the regulator had put pressure on fund managers to buy shares. One thing the regulator certainly did do was approve four new equities funds, which was seen as a move to help stabilize the market. The Shanghai Composite Index still finished 17% off its high of last Tuesday and analysts warned of several more days of erratic trading.