Stocks gain as signs of government resolve gather

Stocks in Shanghai and Shenzhen extended gains Tuesday, as investors took Chinese Premier Li Keqiang's statement that economic growth below 7 percent could not be tolerated as showing the government's determination to adjust its policies to support growth.

As well as Premier Li's remark, a recent speech by Vice Premier Zhang Gaoli during a visit to Guizhou Province and minister of finance Lou Jiwei's comments at the G20 meeting have signaled the government is shifting its focus to support economic restructuring and prevent a hard landing.

The Shanghai Composite Index touched an intraday high of 2,051.53, then dipped in the afternoon session to close up 1.95 percent at 2,043.88. The Shenzhen Component Index began the day strong and continued to surge to end up 279.48 points, or 3.64 percent, at 7,963.70. The combined trading volume of the two stock exchanges was 276 million shares, with a total turnover of 220.47 billion yuan ($35.9 billion).

The People's Bank of China (PBC) made an official statement Tuesday to dispel a rumor that it had issued notes to banks asking them to restrict loans to businesses in more than 10 industries, including cement, steel and optical fiber, due to overcapacity.

High-speed train stocks jumped 5.3 percent after China Railway Corporation announced that around two thirds of its fixed-asset budget for this year remains unspent, prompting speculation that it will speed up rail construction in the second half of this year. CSR Corporation Limited and China CNR Corporation Limited led the surge.

Resource, property, media and entertainment and telecommunication sectors all saw gains.

Telecommunication company ZTE Corp reported strong quarterly earnings Tuesday, and the company's share price rose by the 10 percent maximum.