China's stocks rose, led by financial companies, after China Merchants Bank Co. said first- half profit more than doubled on wider loan margins and increased income from credit cards.

Merchants Bank, the biggest lender in southern China, advanced 1.9 percent, set for the largest gain since Aug. 1. Net income rose 116 percent to a record 13.25 billion yuan, it said last night. Industrial & Commercial Bank of China Ltd., the nation's No. 1 listed lender, added 1.1 percent.

The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, gained 30.96, or 1.3 percent, to 2,344.37 as of 1:57 p.m. local time. A gauge of financial companies was the biggest contributor to the advance. The measure fell 5.5 percent yesterday on concern the government will refrain from introducing measures to boost equities.

``Earnings from banks are still pretty solid and have stirred some bargain buying,'' said Yan Ji, an investment manager at HSBC Jintrust Fund Management Co. in Shanghai, which manages the equivalent of about $850 million. ``But the overall market sentiment is still weak. The market might go down further after the rebound.''

The CSI 300, which is at its cheapest in relation to earnings since March 2006, has tumbled 56 percent this year, the most among 88 global measures tracked by Bloomberg, on concern measures to cool inflation will damp earnings. The central bank has raised the amount of money that banks must set aside as reserves to a record this year.

Merchant's Profit

Merchants Bank's profit beat the 12.5 billion yuan median forecast by five analysts in a Bloomberg survey. Merchants Bank rose to 21.59 yuan. Industrial & Commercial Bank advanced to 4.58 yuan. China Construction Bank Corp., the country's second- largest lender, gained 0.6 percent to 5.14 yuan.

China Minsheng Banking Corp., the nation's first privately owned bank, advanced 2.8 percent to 5.60 yuan. The bank said it received regulatory approval to open a branch in the southern Chinese city of Changsha.

The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, rose 0.9 percent to 2,340.73. The Shenzhen Composite Index added 1 percent to 662.6.