The benchmark Shanghai Composite Index added 5.52 points to 2,219.13 on turnover of 97.2 billion yuan ($15.6 billion). The closing level was the highest since July 6 this year when the index ended at 2,223.58.

"The market is taking a breather after gaining sharply yesterday, but the upward trend is unchanged on the back of an economic recovery and policy hopes," Zheshang Securities analyst Zhang Yanbing told AFP.

Shares rose 2.53 percent Tuesday.

China's economic growth has slowed for seven straight quarters. But recent strength in areas including manufacturing, industrial production and retail sales have spurred optimism growth will pick up in the current fourth quarter.

Investors also expect stimulus policies from the new leadership after they pledged to boost domestic consumption and push forward urbanisation at a key economic conference earlier this month, analysts said.

Property developers extended gains on media reports that China's housing ministry will continue with its current control measures next year, which analysts said may indicate that stepped-up control over the sector is unlikely.

Guangzhou Pearl River Industrial Development surged by its 10 percent daily limit to 13.26 yuan, Gemdale rose 2.19 percent to 6.54 yuan and Poly Real Estate climbed 1.95 percent to 13.09 yuan.

Liquor makers ended higher despite a central government ban on luxury banquets for officials, as demand usually picks up for new year celebrations and during winter months.

Hengshui Laobaigan Liquor jumped 5.86 percent to 34.69 yuan while Kweichow Moutai gained 3.77 percent to 26.46 yuan.