SHANGHAI--China's shares ended at a one-week high Thursday as a media report that banks ramped up lending this month gave the market fresh hope that Beijing is resorting to investment again to resuscitate the domestic economy.
The benchmark Shanghai Composite Index, which tracks both A and B shares, ended up 0.7%, or 15.74 points, at 2184.84, the highest closing level since July 13, when it settled at 2185.90. The Shenzhen Composite Index rose 0.8%, or 7.07 points, to 903.25.
The market got a boost from a report in the state-run Shanghai Securities News on Thursday that cited unnamed sources as saying China's four biggest banks issued about 50 billion yuan ($7.9 billion) of new loans in the first half of July, double that of the same period last month.
"This is another signal that indicates policy easing is picking up speed," Nomura China chief economist Zhiwei Zhang wrote in a note, adding that total new yuan loans in July could rise to CNY1 trillion from CNY920 billion in June.
TX Investment analyst Qiu Yanying said: "In recent weeks, investors have been juggling hopes for policy catalysts and worries over sliding corporate earnings. The loan report is helping hopes outweigh the concerns today."
Mr. Qiu noted that investment-related stocks, such as cement and construction companies, rose sharply because of the report.
Jiangxi Wannianqing Cement gained 2.8% to CNY12.24, Huaxin Cement added 1.9% to CNY12.11, and Shanghai Construction Group rose 6% to CNY6.88.
"It appears that the downturn [in the broader market] should be close to an end" as the year-to-date low of 2132.63 seems to be a firm support for the Shanghai index, said Li Lei, a Goldstate Securities analyst.
"But you shouldn't expect China shares to rebound too much before there are signs that the economy and corporate earnings are on the mend," he said.
Mr. Qiu offered similar views, saying: "As of now, the central government has yet to say how it would stimulate the economy. Hopes for a massive investment-led stimulus package could be quickly dashed if there is no further policy easing in coming days."
Among the day's big gainers were insurance companies because of expectations that their premium growth may recover as interest rates fall. Typically, when bank deposit rates are cut, demand for insurance products rise. China has lowered its benchmark interest rates twice since June.
Earlier this week, China Life reported an 8.3% growth in premium income in June after four consecutive months of declines. The insurer rose 5.6% to CNY20.00.
Ping An Insurance was up 3.7% at CNY45.94, China Pacific Insurance gained 4.5% to CNY23.6.
Write to Rose Yu at rose.yu@dowjones.com
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