Chinese stocks reversed a slump upon opening to post solid gains in the Monday morning session despite an interest rate rise announced by the central bank at the weekend.

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The benchmark Shanghai Composite Index opened at 2,864.26, a decrease of 2.25 per cent from the closing point of the previous session.

However, the stocks, led by financial shares, started to recover the loss within twenty minutes. At the end of the morning session, the Shanghai Composite Index finished up 2.51 per cent at 3,003.98.

The Industrial and Commercial Bank of China, the country's biggest lender, rose 3.84 per cent to 5.14 yuan while China Life, China's largest life insure, gained 3.55 per cent to 35.01 yuan.

China Merchants Bank surged 7.6 per cent to hit 16.7 yuan and Bank of China was up 4.8 percent to 5.24 yuan.

The surge came after the People's Bank of China raised benchmark one-year lending and deposit rates by 0.27 percentage point at the weekend, the third increase in less than one year.

The rate rise was the latest in a series of tightening measures to cool off the torrid economy which, as Premier Wen Jiabao said Friday, is facing a list of problems, including excessive investment, credit, liquidity and swelling foreign exchange reserves.