Shanghai stocks closed up more than three percent on Wednesday, rebounding after three consecutive sessions of losses fuelled by worries of another market rout.
The benchmark Shanghai Composite Index rose 3.44 percent, or 126.17 points, to 3,789.17 on turnover of 557.5 billion yuan ($91.17 billion).
The Shenzhen Composite Index, which tracks stocks on China`s second exchange, added 4.13 percent, or 87.11 points, to 2,198.81 on turnover of 523.1 billion yuan.
The rebound followed an 8.48 percent drop in the Shanghai market on Monday, the biggest one-day fall in eight years and a 1.68 percent loss Tuesday. Teh market also sank 1.29 percent Friday following a weak reading on July manufacturing activity.
After the market closed on Tuesday, the securities regulator warned it would investigate Monday`s "abnormal" fall, blaming it on "concentrated" selling of shares. It gave no further details.
"The government`s pledge to investigate Monday`s plunge could keep the downside to a minimum for now," Bernard Aw, a strategist at IG Asia in Singapore, told Bloomberg News.
"In addition, state funds should continue to provide support to blue chips," he said.
To control a rout after the Shanghai market fell 30 percent from its peak in mid-June, the government has banned shareholders with more than five percent stakes from selling stock and launched a police crackdown on short-selling.
It has also funded the state-backed China Securities Finance Corp., tasked with stabilising the market, to buy stocks, media reports say.
