On December 4, China Eastern Airlines Corp shares surged 19 per cent after its parent firm offered sweeteners to transfer its State stakes into tradable shares.

The offer has made its assets more attractive to overseas investors as the smallest of the mainland's big-three airlines is looking for strategic partners.

A fund manager said: "China Eastern was in advanced talks with Singapore Airlines, which will buy yuan denominated A-shares in the company, but a deal will only be announced early next year."

On December 4, China Eastern's A-shares rose 10 per cent to 3.42 yuan after its parent body said it would offer 3.2 shares for every 10 shares held in a reform plan. Earlier, it had offered 2.8 shares for every 10.

Its shares in Hong Kong jumped to a 23-month high of HK$1.7 in heavy trade before closing at HK$1.66, up 16 per cent.

The Shanghai-based airline has reserved its comment on the stock deal and declined to say anything on the share sale talks between China Eastern and Singapore Airlines.

A spokesman, however, said China Eastern shareholders will vote on the reform plan on December 18.

China Eastern Chairman Li Fenghua had told Reuters last month that the airline was still discussing the possible sale of a minority stake to Singapore Airlines. If struck, the deal would be for as large as 25 per cent stakes, in conformity to market speculation.

Guotai Junan Securities analyst Alan Lam said people were buying into its shares in the hope that the airline would speed up the process of attracting foreign strategic investors after the share reform.

Mainland-listed companies have been reforming their share structure since last year to allow their State-owned shares to be converted into ordinary yuan denomination shares that can be traded freely in the domestic stock markets.

But China Eastern stocks were overbought, Lam said, because of the earnings prospects, debt level and a recent rise in fuel prices.