The benchmark Shanghai Composite Index gained 0.2 percent to close at 5,272.81 points on the first trading day of 2008. The Shenzhen Composite Index for China's smaller second market rose 1.8 percent to 1,472.44.

Beijing Yanjing Brewery, a major beer producer, rose by the maximum daily limit of 10 percent. Bright Dairy & Food gained 4.1 percent.

"Investors are no longer enamored with banks and property developers, as both sectors have the cloud of 'macroeconomic tightening' hanging over them," said Zhang Yang, an analyst with Orient Securities.

"They're buying food and drink makers, because the consumer goods sector is one the government won't interfere with, and food prices are rising," Zhang said.

Airlines also posted gains. Air China jumped 8.1 percent; Shanghai Airlines increased 3.3 percent.

"The strong yuan and the Olympics are the themes with great enduring power that drive airline stocks," Zhang said.

The Chinese currency, the yuan, rose to its highest level in 13 years, trading at 7.2952 to the U.S. dollar.