BEIJING (Bloomberg) - China's stocks rebounded from the longest losing streak since October after benchmark money-market rates dropped and speculation grew that the government will take measures to bolster the economy.
Financial and energy companies led gains, with Yanzhou Coal Mining Co and China Life Insurance Co surging more than 3 per cent. PetroChina Co climbed for the first time in six days, while Haitong Securities Co. advanced 2.4 per cent.
The People's Bank of China injected 90 billion yuan (US$14.4 billion) into the money markets to avoid a cash crunch amid new share offerings and ahead of Chinese New Year holidays.
The Shanghai Composite Index had risen 1 per cent to 3,159.49 at 9:35 am, halting a five-day, 7.5 per cent slide that dragged down its relative-strength index to the lowest level in three months.
Stocks have fallen this year amid concern the world's second-biggest economy is weakening after Monday's data showed manufacturing contracting in January.
"The rally could be on expectations of some policy easing after the weak PMI number," said Audrey Goh, Singapore-based investment strategist at Standard Chartered Plc. "I won't be surprised to see more easing measures."
The CSI 300 Index advanced 1.1 per cent, Hong Kong's Hang Seng China Enterprises Index climbed 0.3 per cent and the Hang Seng Index added 0.2 per cent. The Bloomberg China-US Equity Index, the measure of the most-traded US-listed Chinese companies, rebounded 1.7 per cent in New York.
The Shanghai gauge trades at 11.7 times projected 12-month earnings, compared with the 10-year average of 14, according to data compiled by Bloomberg.