SHANGHAI Jan 6 China stocks bounced on
Wednesday, led by a surge in resources shares, on hopes that
regulators will extend a ban on share sales by major
stakeholders as Beijing scrambled to avert a potential repeat of
last summer’s market crash.

The CSI300 index of the largest listed companies
in Shanghai and Shenzhen rose 1.8 percent, to 3,539.81, while
the Shanghai Composite Index gained 2.3 percent, to
3,361.84 points.

State media reported that the ban on share sales, due to
expire on Friday, will remain in place until new rules to manage
the process are promulgated.

The market was also helped by statements from at least 30
companies saying their controlling shareholders or senior
executives would not sell shares on the secondary market within
the next six or 12 months.

The reports were the latest damage-control measures
announced after China’s major benchmark indexes plunged 7
percent on Monday, forcing the first-ever nationwide trading
halt and roiling global markets.

Many traders largely attributed Monday’s sell-off to fears
that the expiry of the share-sale ban, imposed at the height of
the market rout last year, could see an estimated 1.24 trillion
yuan ($190.23 billion) of shares dumped onto the market.

However, some traders say further restricting share sales
was not justified, and would only prolong, rather than stop,
market volatility.

“It’s like the sword of the Damocles overshadowing the
market,” Shen Weizheng, fund manager at Shanghai-based Ivy
Capital said, adding the real worry is that the Chinese economy
will remain weak.

Activity in China’s services sector expanded at its slowest
rate in 17 months in December, a private survey showed on
Wednesday, in a further indication that the world’s
second-largest economy may be losing steam.

On Chinese share markets, all sectors rebounded on
Wednesday, with resources and energy
surging more than 5 percent.

(Reporting by Samuel Shen and Pete Sweeney; Editing by Richard
Borsuk)