Shanghai's key stock index surged more than 6 percent yesterday and recovered most of previous day's tumble, led by refiners on speculation that China will introduce a retail fuel tax.
The Shanghai Composite Index jumped 6.05 percent, or 115.04 points, to 2,017.47, after reaching an intraday low of 1,883.84.
But turnover in the market shrank to 86.35 billion yaun (US$12.7 billion), from 103.7 billion yuan on Tuesday.
Han Wenke, the head of energy research at the National Development and Reform Commission, said China, the world's second-largest energy user after the United States, will introduce a retail fuel tax soon. But he declined to give more details.
"The introduction of a retail fuel tax will accelerate the reform of domestic oil products and boost the refiners' profitability to a large extent," Deng Yong, an analyst at Haitong Securities Co, said.
"Sinopec surged by the maximum (allowed daily cap), which boosted market sentiment but investors stayed concerned over the shrinking turnover," United Securities Co wrote in a research note.
"The rebound of market heavyweights showed a firmer market confidence, which turned into an upbeat mood," GF Securities Co wrote in a note.
The telecommunications sector advanced on news that licenses for the long-awaited third-generation, or 3G, mobile services are expected to be issued by the government by January.
China United Telecommunications Corp and SVA Electron Co soared by the 10 percent daily limit to 6.03 yuan and 2.54 yuan respectively.
