Stock market rebounds after worst start to new year

An investor walks past an electronic display showing prices of shares at a brokerage house in Fuyang city, east China's Anhui province, Jan 6, 2016. [Photo/IC]

The country's stock market lit up on Wednesday, with shares registering highest gain in more than two weeks, after suffering the worst start to a year.

The benchmark Shanghai Composite Index closed at 3,361.84, up 2.3 percent, while the Shenzhen Component Index climbed 2.2 percent to 11,724.88.

Coal and steel sectors led the rally. Datong Coal Mine, Zhengzhou Coal & Electric Co and Yanzhou Coal Mining Co surged by the daily limit of 10 percent. Western Mining Co and Zijin Mining Group Co jumped by 5 percent.

The CSI 300 Index, which tracks some of the largest-cap stocks in Shanghai and Shenzhen, rose 1.8 percent to 3,539.81 as of closing.

State-controlled funds stepped up on Tuesday to buy equities and support the market, according to Bloomberg, after the market plunged into a halt on the first trading day of the new year, when a 7 percent slump of the CSI 300 triggered the circuit breaker mechanism.

Under the new rule effective from Monday, trading of stocks, index futures and options will be suspended for 15 minutes when the CSI 300 fluctuates by 5 percent. Trading will be halted for the remainder of the day when the index moves by 5 percent after 2:45 pm or 7 percent at any time during the trading session.

The rally came despite renminbi's fall. The People's Bank of China cut its daily reference rate for the seventh day in a row to 6.5314 renminbi to the dollar on Wednesday, the weakest level since April 2011.