SHANGHAI stocks rose to a two-week high yesterday on investor optimism about corporate earnings and hopes that more funds will be channeled into the market.

The Shanghai Composite Index increased 1.2 percent to 2,231.17 points.

"The improved performance and valuation of companies will boost market sentiment as investors are more optimistic about the earnings outlook," said Guotai Junan Securities in a research note yesterday. "Listed companies showed improved earnings in the fourth quarter of last year and the first quarter of this year."

The combined net profit of companies listed on Shanghai's A-share market rose 8.6 percent in the October-December quarter and 11 percent in January-March from a year earlier.

Western Securities Co said about 10 billion yuan (US$1.6 billion) will be channeled into the stock market as fund companies have to invest 80 percent of their funds into equities under a China Securities Regulatory Commission plan.

Jiangxi Copper Co, China's biggest producer of copper, jumped 3.6 percent to 21.33 yuan. Yunnan Copper Industry Co, the fourth-largest producer of the metal, added 3.2 percent to end at 12.51 yuan.