Jan. 16 (Bloomberg) -- China’s stocks advanced, sending the benchmark index higher for a second week, on speculation the government will speed up support for machinery makers and brokerages to revive earnings and counter an economic slowdown.

Changsha Zoomlion Heavy Industry Science & Technology Development Co., the nation’s second-biggest maker of concrete- handling machinery, climbed 4.3 percent. Guangxi Liugong Machinery Co., the maker of construction equipment, advanced 1.6 percent. Citic Securities Co. and Haitong Securities Co., the country’s top two brokerages, gained more than 4 percent.

The CSI 300 Index jumped 35.34, or 1.8 percent, to 1,990.21 at the close, outperforming other Asian indexes and extending its weekly gain to 3.8 percent. The Shanghai Composite Index, which tracks the bigger of China’s two stock exchanges, added 1.8 percent to 1,954.44.

“Investors are getting more optimistic with more stimulus plans for different industries in the pipeline,” said Xu Lirong, a fund manager at Franklin Templeton Sealand Fund Management in Shanghai, which oversees the equivalent of $2.56 billion. “Liquidity is improving and moving to equities.”

The CSI 300 has advanced 9.5 percent this year, the world’s second-best performer, as the government signaled additional support measures to bolster growth. Premier Wen Jiabao pledged on Jan. 11 to widen a 4 trillion yuan ($585 billion) stimulus package, which was unveiled in November.

China faces an economic “hard landing” with growth slowing to 6 percent or less this year, the weakest pace since 1990, Fitch Ratings said today.

Zoomlion, Sany Heavy

Zoomlion Heavy Industry rose 4.3 percent to 14.13 yuan. Liugong Machinery gained 1.6 percent to 11.66 yuan. Sany Heavy Industry Co., China’s biggest maker of machinery for handling concrete, climbed 1.3 percent to 18.47 yuan. Weichai Power Co., a maker of high-speed heavy-duty diesel engines, added 2.9 percent to 22.75 yuan.

China’s National Development & Reform Commission and the Ministry of Industry & Information Technology will review a stimulus package today to help machinery companies, Shanghai Securities News reported, without citing anyone.

The package aims to speed up mergers and acquisitions and encourage technology innovation. The government will also offer tax subsidies for buying environmentally-friendly or China-made machines, it said.

“Stimulus measures are being considered as the manufacturing industry has been adversely affected by the economic slowdown,” said Chen Yaobang, a Nanjing-based analyst at Huatai Securities Co.

Margin Trading

Citic Securities, the country’s biggest brokerage by market value, climbed 4.1 percent to 20.57 yuan. Haitong Securities, the No. 2, jumped 7.2 percent to 10.91 yuan. Northeast Securities Co. added 2.6 percent to 13.84 yuan.

“The market expectation is intensifying that big brokerages will be allowed to start new innovative businesses soon,” said Shao Ziqin, an analyst at Ping An Securities Co. in Shenzhen.

The securities regulator will encourage long-term investments in equities while allowing margin trading and short- sales on a trial basis, Shang Fulin, chairman of the China Securities Regulatory Commission, said during an annual conference, according to a statement posted on the Web site on Jan. 14 after the market closed.

The following companies were among the most active in China’s markets. Stock symbols are in brackets after companies’ names.

Baoshan Iron & Steel Co. (600019 CH), China’s biggest steelmaker, rose 0.10 yuan, or 2 percent, to 5.19. The company’s parent Baosteel Group Corp. and its competitors may have to limit domestic prices of iron ore sold from their inventories, said two people familiar with the situation.

China Eastern Airlines Corp. (600115 CH), the nation’s third-largest carrier by fleet size, climbed 0.47 yuan, or 9.9 percent, to 5.20, extending yesterday’s 10 percent gain. The carrier said it will receive a 5.55 billion yuan short-term loan from its parent. The six-month loan will be used as working capital by China Eastern to ease its liquidity, it said.

China Life Insurance Co. (601628 CH), the nation’s biggest insurer, gained 0.73 yuan, or 3.8 percent, to 19.86. China Life said it booked premium income of 295.6 billion yuan in 2008, a 50 percent gain from a year earlier.

China Southern Airlines Co. (600029 CH), the nation’s biggest carrier by fleet size, added 0.09 yuan, or 2.6 percent, to 3.54. The carrier opened a representative office in Taipei yesterday, becoming the first Chinese airline to gain a foothold in the Taiwan market, Deutsche Presse-Agentur reported on its Web site.

Ningbo Shanshan Co. (600884 CH), a producer of suits and casual wear, jumped 0.74 yuan, or the 10 percent daily cap, to 8.13, the highest since Aug. 6. The company said Itochu Corp. of Japan is in talks to buy a 30 percent stake in parent company Shanshan Group Co.

Orient Group Inc. (600811 CH), a Chinese maker of building materials, jumped 0.47 yuan, or 10 percent, to 5.13. The company said profit last year more than doubled on its sale of a stake in New China Life Insurance Ltd.

Wuhan Iron & Steel Co. (600005 CH), China’s fifth-biggest steelmaker by value, added 0.05 yuan, or 0.9 percent, to 5.86. Wuhan Steel had its stock rating upgraded to “neutral” from “sell” at Goldman Sachs Group Inc. The share-price estimate was increased by 21 percent to 4.7 yuan.

Zijin Mining Group Co. (601899 CH), China’s largest gold producer, gained 0.12 yuan, or 2.5 percent, to 4.93. Zijin Mining had the rating on its Hong Kong-listed shares cut to “neutral” from “buy” at Goldman Sachs Group Inc.

To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net

Last Updated: January 16, 2009 04:11 EST