SHANGHAI - Stocks on the Chinese mainland rose the most in three weeks as surging grain prices boosted agricultural companies and higher vehicle sales lifted automakers.

Heilongjiang Agriculture Co and Shandong Denghai Seeds Co advanced as wheat prices surged to a record after the government said a drought in the main growing region may be prolonged.

Investors monitor stock prices at a brokerage in Beijing. The Shanghai Composite Index rose 1.59 percent to 2,818.16 at the 3 pm close on Feb 10, 2011, the biggest gain since Jan 19. [Photo/China Daily]

"Some companies, especially agricultural stocks, may outperform in an inflationary environment because of their ability to raise prices," said Zhang Qi, an analyst at Haitong Securities Co in Shanghai. "The latest interest-rate increase definitely isn't the end of the tightening."

Jiangling Motors, the Chinese commercial vehicle partner with Ford Motor Co, jumped by the 10 percent daily limit after boosting sales. SAIC Motor Corp also jumped by the daily limit as its passenger-car venture boosted sales 46 percent. FAW Car Co, which makes passenger cars in China with Volkswagen AG, gained 8.56 percent on Thursday.

Jiangxi Copper Co paced gains by commodity producers as copper and oil prices rebounded.

China Oilfield Services Ltd dropped 3.05 percent as UBS AG cut its recommendation on the stock.

The Shanghai Composite Index rose 1.59 percent to 2,818.16 at the 3 pm close on Thursday, the biggest gain since Jan 19. The CSI 300 Index added 2.08 percent to 3,104.16 on Thursday, while the CSI Smallcap 500 Index jumped 2.7 percent, the most since Dec 13.

Related readings:  China's stocks close 1.6% higher Thursday  Central bank plans overhaul of money policy  Taming inflation high on central bank's agenda

"Stocks are cheap and any positive factor will provide a boost to share prices," said Dai Ming, a fund manager at Shanghai Kingsun Investment Management & Consulting Co. "The rebound may be limited because the government's battle against inflation isn't over."

Stocks on the Shanghai gauge trade at 13.2 times estimated earnings, compared with a multiple of 16 at the end of last year, according to weekly data compiled by Bloomberg. The index has tumbled 11 percent from a Nov 8 high on concern accelerating inflation will prompt tighter monetary policies.

A gauge of consumer staple producers rose 3.1 percent on the CSI 300. Heilongjiang Agriculture, the country's third-largest listed food producer, climbed 3.4 percent to 15.20 yuan ($2.31), the highest close since Nov 11. Gansu Dunhuang Seed Co, a producer of grain and vegetable seeds, surged 2.8 percent to 35.28 yuan, a seventh day of gains. Denghai Seeds jumped 5.27 percent to 68.56 yuan.

Software stocks rose after the State Council said the government will boost development of the software and chip industries through tax breaks, mergers and investment.

China National Software & Service Co jumped 5.04 percent to 21.66 yuan. Neusoft Corp advanced 3.09 percent to 15.35 yuan.

Bloomberg News