Chinese shares rise over liquidity injection

Chinese shares closed higher on Tuesday after the central bank injected liquidity into the money market for the first time since February in order to quell credit crunch worries.

The benchmark Shanghai Composite Index rose 0.70 percent, or 13.76 points, to end at 1,990.06. The Shenzhen Component Index gained 0.80 percent, or 61.64 points, to 7,730.17.

Combined turnover on the two bourses retreated slightly to 157.65 billion yuan (25.51 billion U.S. dollars) from 159.25 billion yuan the previous trading day.

The People's Bank of China (PBOC), or the central bank, injected liquidity into money markets via open market operations to rid worries of another possible credit crunch at the end of July, as a reported credit crunch in late June pushed up interbank rates and affected the stock market.

The PBOC conducted a seven-day reverse repurchase operation worth 17 billion yuan on Tuesday, with the bid interest rate set at 4.40 percent, the PBOC said on its website.

The move will be helpful, as liquidity has been tight and the injection can help stabilize market expectations, said Song Qiuhong, an analyst at Shunde Rural Commercial Bank.

The financial sector led the rise, going up 2.23 percent. Industrial and Commercial Bank of China Ltd., the country's biggest listed lender, went up 0.51 percent to 3.91 yuan per share. China Construction Bank Corp., another financial heavyweight, gained 1.67 percent to 4.28 yuan per share.