BEIJING, July 29 -- China's key stock index rose 2.26 percent on Wednesday to its highest close in two months after the central bank said economic growth would slow but there would be no double-dip in the economy, bolstering sentiment.
Small-cap shares, particularly cement stocks such as Inner Mongolia-based Xishui Strong Year Co, were among the biggest gainers after local media reported new development plans for the cement industry.
The Shanghai Composite Index ended the day at 2,633.66 points, recovering from a 0.5 percent drop on Tuesday and breaking through 2,600 points, a psychologically important level for investors, for the first time since the end of May.
The Shenzhen Stock Index advanced 2.45 percent, or 258.96 points, to 10,825.17 points.
Beijing's steps to cool speculation in the red-hot property sector, as well as tight liquidity, squeezed by initial public offerings including Agricultural Bank of China's mammoth IPO, prompted a nearly 30 percent fall in Shanghai A shares earlier this year.
The index has rebounded in recent sessions on confidence about the policy outlook for the rest of the year and a sizable improvement in liquidiity.
"We are on an upward trend now. Breaking through the 2,600 point level is a great boost to investor sentiment," said Chen Shaodan, analyst at Stockfly Securities in Beijing.
Chen said the index would be able to reach 2,800 points in the near term.
Volume rose to a three-month high of 122 billion yuan ($18 billion) from Tuesday's 85 billion yuan. Turnover has picked up significantly over the past week.
Gaining Shanghai shares overwhelmed losers 890 to 4.