Shares regain ground after Wednesday's fall

China's stocks gained, with the Shanghai Composite Index rising from its biggest loss in eight months, as lenders climbed after the central bank damped speculation it will rein in bank lending.

The benchmark gauge advanced 1.7 percent to 3,321.56 at close, after changing direction at least 10 times, as the People's Bank of China affirmed a "moderately loose" monetary policy to support the nation's economy.

The Shanghai measure tumbled 5 percent on Wednesday amid concern the government will curb inflows into a market that had more than doubled from last year's low. Beijing-based Caijing magazine reported on Wednesday that the central bank might order lenders to set aside larger reserves.

"As long as the scenarios of economic recovery and ample liquidity don't change, the upward trend on the market won't be reversed," said Chen Wenzhao, a strategist at China Merchants Securities in Shanghai. "Given the recovery is still at an early stage, it's unlikely the government will change its policies."

The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, added 2.1 percent to 3,634.82. A gauge of 50 financial companies on the index climbed 3.1 percent, accounting for 60 percent of the CSI 300's gains yesterday.

In the second half of this year, the central bank will "emphasize the use of market tools instead of quantity controls to guide appropriate growth in money supply and lending growth," said People's Bank of China Deputy Governor Su Ning in Shanghai.

Industrial & Commercial Bank, the nation's biggest listed lender, added 3.3 percent to 5.34 yuan. Construction Bank, the second largest, jumped 6 percent to 6.52 yuan. Shenzhen Development Bank, controlled by buyout firm TPG Inc, climbed the daily 10 percent limit to 26.18 yuan.

Commodity producers gained on optimism loan growth will spur demand for metals. Aluminum Corp of China, the nation's biggest maker of the metal, jumped 4.9 percent to 18.16 yuan, snapping a two-day, 10 percent drop. Jiangxi Copper, the country's largest copper producer, added 2.5 percent to 43.67 yuan.

Hang Seng rises

Hong Kong shares rose 0.5 percent in volatile trade yesterday, stabilizing after the previous sessions' sell-off, but gains were capped ahead of key corporate earnings next week.

The benchmark Hang Seng Index finished up 98.58 points at 20,234.08, but turnover dropped to HK$76.2 billion.

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