China's main stock index climbed for the first time above the 5,000-point level on Thursday, passing another milestone in a spectacular bull run that has more than quadrupled the index since the start of last year.

The rise was greeted with euphoria by Chinese investors, millions of whom have flooded into the stock market for the first time this year in one of history's fastest shifts of money into equities.

In a dusty trading hall at a Haitong Securities branch in downtown Shanghai, elderly retirees who had gathered to bet on stocks began singing the national anthem as electronic screens showed the index starting the day above 5,000.

In a bull run like this, breaking 5,000 was just a matter of time, said Huang Yan, asset manager at Guotai Fund Management, which has 70 billion yuan ($9.2 billion) under management.

Stocks aren't cheap, but as long as people keep pouring money into the market as they are, it will go up.

The Shanghai Composite Index closed 1.05 percent higher at 5,032.494 points, after setting a new intra-day record of 5,050.383.

It ended last year at 2,675 points and closed the previous year at 1,161. The bull run, and the listings of many of China's top firms, have added a staggering $2.5 trillion to the value of the Shanghai and Shenzhen markets since the start of 2006.

Thursday's milestone was passed three months to the day after former U.S. Federal Reserve chairman Alan Greenspan, echoing the fears of some foreign economists and officials, warned China's market had risen too fast and was heading for a dramatic contraction. At that time, the index was at 4,173 points.

Many Chinese investors and analysts see a chance of the market stalling or pulling back from 5,000 for a few weeks.

But most think the bull run has further to go in the coming year. Some traders are talking of new targets for this year of 5,500 or 5,600 points.

The market will continue to rise, as new entrants during the big fluctuations in June haven't made enough money yet, said Gu Lingyun, asset manager at Orient Securities. And there are more people waiting to enter the market.

Some big foreign investment banks agree it will be difficult to halt the uptrend. Dutch bank ING predicted in June that the index would hit 8,000 points over the next three to four years.

This month the market has kept rising despite a plunge in global markets, an interest rate hike, and Monday's news that China would let residents invest directly in overseas securities, which could eventually siphon funds from domestic stocks.

China's economic boom is sustaining the uptrend -- net profits at the more than 1,450 listed companies doubled from a year earlier in the first quarter of 2007, and appear set to rise more than 50 percent for the first half.

Many Chinese stocks are wildly overvalued by international standards, trading around 36 to 39 times this year's forecast earnings against half that level or less for big foreign markets.

But some analysts argue such comparisons miss the point. Many Chinese firms can expect lucrative injections of assets from their state-owned parent groups, while developing a strong stock market is a key goal of the government's economic policy.

YUAN BOOSTS PROPERTY STOCKS

Property shares helped lead the market up on Monday, with the largest listed developer Vanke up 2.94 percent to 34.79 yuan in response to the Chinese currency's biggest rise against the dollar in six weeks.

Yuan appreciation tends to boost property shares by inflating their asset values. The yuan had stopped appreciating for the past six weeks as the central bank held it steady, apparently because of global market turmoil, so the currency's jump on Thursday was positive.

Appliance maker Qingdao Haier shot up 9.05 percent to 22.90 yuan after saying net profit surged 37 percent in the first half of this year.

Hong Xing Iron & Steel soared its 10 percent daily limit to 15.93 yuan after saying its main shareholder Gan Su Jiu Steel Group had agreed to form a joint venture with International Mineral Resources and Eurasian Natural Resources.

CITIC Securities gained 5.91 percent to 94.95 yuan as it launched a public offer of new shares to raise up to 25 billion yuan ($3.3 billion). The offer is priced at 74.91 yuan a share.

In a sign that the rise to 5,000 points might be fuelling fresh speculative fever, more than 35 special treatment shares -- companies which have posted consecutive annual losses -- jumped their 5 percent daily limits.

Shandong Jintai, a drugs maker, rose its 5 percent limit for the 37th straight trading day to 19.83 yuan, on talk that its parent group would inject assets into the company.

Three new shares soared as they listed in Shenzhen. Shanghai CIMIC Tile rocketed to 16.03 yuan from its IPO price of 5.08 yuan, Ningbo Donly Transmission Equipment surged to 31.78 yuan from 8.20 yuan, and Shenzhen Sanxin Special Glass Technology jumped to 23.94 yuan from 8.15 yuan.

A total of 532 Shanghai shares rose while 311 fell. Turnover in Shanghai A shares was active at 152.6 billion yuan ($20.1 billion), but remained much lower than levels hit during a period of speculative fever in May.

The average premium of A shares over Hong Kong-listed H shares continued to drop, to 66 percent from 69 percent. The drop began on Monday, when China said it would let residents buy overseas stocks directly.

($1 = 7.58 yuan)

(Samuel Shen contributed to this story)

China Investment