China's shares reversed early losses to close up 0.21 percent on Wednesday as investors sought bargains among large-caps such as Wuhan Iron and Steel Co Ltd.
The benchmark Shanghai composite index finished at 1,099.261 points, reversing a 0.34 percent fall at midday due to a dumping of companies that had joined Beijing's unpopular scheme to float $250 billion of non-traded state shares in listed firms.
Wuhan Steel, China's third-largest steel mill, was Wednesday's most active counter and closed up 2.1 percent at 2.87 yuan, buoyed by technical buying.
Wuhan Steel has still plunged 29 percent since the start of this year and is among other large-caps that have led a 13.2 percent drop in the benchmark index over the same period.
The market has been hit by factors ranging from the state share sell-down to Beijing's steps to cool the racing economy, which investors are worried will hit bottom lines of key firms.
"The market showed some signs of stabilising this afternoon, helped by gains in companies which have heavy weights on the index," said analyst Cao Xuefeng at West China Securities.
But analysts said the index should have little room to rise sharply due to weak sentiment, adding the index would hover near 1,100 points in the near term. On Wednesday investors dumped companies which have completed procedures for the state share reform, including Hudong Heavy Machinery Co, which dived 24 percent to 7.95 yuan.
China in April revived a programme to convert non-traded state shares, which account for two-thirds of market capitalisation, into freely floated stock, triggering worries of a possible flood of new shares onto the stock market.