SHARES in Shanghai yesterday rebounded with a vengeance to post the biggest daily increase in nearly two months.

The benchmark Shanghai Composite surged 5.24 percent, or 146.36 points, to 2,941.12 yesterday. The index has lost 19 percent so far this month. Turnover rose to 69.03 billion yuan (US$10 billion) from the previous session's 43.84 billion yuan. Gainers outnumbered decliners 780 to 16 with 57 firms ending flat.

Blue chips including energy and financial sectors were among the strong risers.

PetroChina Co, the country's biggest oil company, rose 5.58 percent to 16.09 yuan. Yanzhou Coal Mining Co jumped nearly 10 percent to 20.59 yuan. Shanxi Guoyang New Energy Co climbed to 38.73 yuan by hitting the 10 percent daily trading cap. Haitong Securities also soared 10 percent to 22.36 yuan while Citic Securities rose 6.1 percent to 26.27 yuan.

"The rise in turnover showed investors were betting on a rise," said Lin Weiwen, a Hualin Securities Co analyst. "The rebound is the outcome of recent irrational selling."

Wang Xingjun, a Donghai Securities analyst, said investors would be better to focus on individual companies with good asset quality.

The slide in China's stock market will not be sustained, a senior government adviser said in a report yesterday.

"China's cloudy stock market is in contrast to the sunny skies of the country's economic fundamentals," Li Deshui, a member of the Chinese People's Political Consultative Conference and former director of the National Bureau of Statistics, wrote in an article published by the China Securities Journal.

"The condition (declining shares) runs contrary to the principle that the stock market should be barometer of the economy, so it will not be sustained," Li wrote.

Investors took his comments as hinting possible government concerns about the recent decline.