Chinese stock prices gained ground again for the second day in a row as the benchmark Composite Index on the Shanghai Stock Exchange closed 1.51 percent higher at 2,716.18 points on Wednesday.

The index, which covers both A- and B-shares, gained another 40.48 points on turnover of almost 79 billion yuan (10.2 billion U.S. dollars) after speculation about government measures to cool down the equity market began to wither.

The Shanghai A-share index finished up 42.75 points at 2,851.99, while the B-share Index closed up 0.74 points at 172.58.

The component index on the smaller Shenzhen Stock Exchange ended up 200.21 points, or 2.73 percent higher at 7,541.74 on turnover of 35.80 billion yuan (4.6 billion U.S. dollars).

Analysts said the China Securities Regulatory Commission's decision to approve five new funds helped to allay worries about over-valued A-shares and boost investors' confidence in the market.

Bank stocks did well. Hua Xia Bank gained 5.04 percent to 10.00 yuan and Shanghai Pudong Development Bank added 3.58 percent to 24.00 yuan.

Blue-chip Bank of China closed 0.87 percent higher at 4.65 yuan. The Industrial Bank, which debuted in Shanghai on Monday, finished 4.83 percent up at 24.96 yuan.

China Vanke, the nation's largest property developer, climbed 5.28 percent to 15.36 yuan. Baoshan Iron & Steel Co., the country's no. 1 steel maker, rose 4.12 percent to 8.59 yuan.

Chen Zhimin, a manager at E Fund Management Co., said "the recent stock slide was useful because it makes investors calm down and counters irrational investment. The correction does not spell the end of a long-term bull market."

According to Guangfa Securities, the chance of another big drop in the near run is slim, and the slump is offering opportunities for bargain-hunting.

A survey of 20 mainstream Chinese securities research agencies and fund management firms by the Orient Securities Research Institute showed that 17 thought the A-Share market, buoyed by excess liquidity and bright profitability prospects of listed companies, would grow another 30 percent this year.

Source:Xinhua