SHANGHAI stocks rose more than 4 percent yesterday after the key index dipped below 3,000 points on Tuesday.
Lenders led the charge after China Merchants Bank Co reported higher earnings.
The Shanghai Composite Index, which covers yuan-denominated A shares and hard-currency B shares, advanced 4.15 percent to 3,278.33. Turnover was 86.1 billion yuan (US$12.3 billion), against Tuesday's 58.8 billion yuan.
On Tuesday, the index fell below the key 3,000 level for the first time in 13 months, before recovering to positive territory by the close.
"Many started to add holdings after the index fell below 3,000," said Chen Huiqin at Huatai Securities. "And we think 3,000 should be the short-term bottom."
China's securities regulator on Sunday announced restrictions on the sale of newly freed and previously non-tradable stocks held by big shareholders.
The market-boosting move came after the Shanghai index suffered its steepest decline in more than 11 years last week. Last Friday's close saw the index nearly 50 percent off its peak in October last year.
"Have you ever seen such a plunge elsewhere in the world? Even without the support policy, the index should bounce back now," Chen said.
China Merchants Bank climbed 4.21 percent to 32.42 yuan after posting a 157 percent jump in first-quarter earnings, leading gains in other financial companies.
Oil producers were also in favor on speculation the government is considering a more friendly tax formula, to support earnings. Chinese oil companies, which sell fuel products under state-capped prices, are booking losses in their refining business with crude rates at record highs.
Top Asian refiner China Petroleum & Chemical Corp, or Sinopec, jumped 6.46 percent to 10.88 yuan. PetroChina Co, the biggest weighting in the index, rose 3.19 percent to 16.52 yuan. PetroChina's gain follows its plan to double annual natural gas output at its Xinjiang field from 5 billion cubic meters to 10 billion cubic meters from 2010 to 2015.
Property developers, which had slumped over the past week on credit and price concerns, bounced back. Poly Real Estate Group Co surged 7.98 percent to 20.30 yuan and Gemdale Corp advanced 7.85 percent to 13.33 yuan.
Jiangxi Copper rallied 10 percent to 27.41 yuan after saying first-quarter profit rose 46 percent to 1.26 billion yuan.