China's shares closed up on Tuesday on speculative buying of small technology and drug counters ahead of Friday's debut in Shenzhen of a board dedicated to start-ups.
Sentiment also got a boost after the central bank denied a media report it had submitted a proposal to the State Council to raise interest rates, which analysts said eased fears of an imminent rate rise.
The benchmark Shanghai composite index, grouping hard-currency B shares and yuan-denominated A shares, rose 1.2 percent to 1,450.683 points, extending a 0.43 percent bounce in the previous session.
Drug firm Jiangzhong Pharmaceutical Co Ltd was among the day's star performers, jumping 6.9 percent to 7.75 yuan, while computer system developer Tongji Science and Technology Co Ltd ended up 2.4 percent at 5.93 yuan.
"As the gong will be banged shortly for the new growth board, speculation in tech stocks is heating up," said analyst Zhang Yong at Great Wall Securities.
The long-awaited board for small- and mid-sized companies begins trade in Shenzhen on Friday.
Though essentially carrying the same stringent listing criteria now required by the main board, analysts see it as paving the way for an eventual Nasdaq-style exchange to help cash-strapped start-ups raise cash.
Tuesday's turnover was moderate at $1.49 billion, although it was up from Monday's $1.01 billion, as investors remained wary that an interest rate rise was imminent as part of Beijing's steps to gently slow its economy.
The key index is still down 18.4 percent since early April, hit by a slew of negative factors, including government-ordered credit curbs to cool an economy that grew 9.8 percent in the year through the first quarter.
Analysts said the market's recent losses had helped ease selling pressure. But it still lacked strong positive factors to drive a solid recovery.
"The index will move narrowly between 1,400 and 1,500 points in the near term," said Huaxi Securities analyst Mao Sheng.
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