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China Focus: China stocks soar in roller-coaster trading

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BEIJING, June 30 (Xinhua) -- Chinese shares bounced back from early morning losses and closed sharply higher on Tuesday following a nightmarish fortnight.

The benchmark Shanghai Composite Index surged 5.53 percent to finish at 4,277.22 points. It fell more than 5 percent in the early morning to 3,847,88 points, extending losses from a peak of 5,178.19 points on June 12.

The Shenzhen Component Index gained 5.69 percent to close at 14,337.97 points.

Tuesday's rally came at a time when rattled investors began to debate whether the year-long bull run had ended as a decline of 20 percent from the recent peak is usually considered the advent of a bear market.

The market has taken a turn for the worse since June 15 on fears over the sustainability of soaring share prices pushed up by a frenzy of speculation, as well as government moves to cool margin trading, a high-risk practice in which investors borrow money to invest in stocks.

The market's losing trend became unstoppable when the Shanghai Index tanked 7.4 percent on Friday, triggering concerns about systemic financial woes.

On Monday, the Shanghai index slipped further by falling 3.34 percent despite forceful easing as the central bank announced on Saturday that it would simultaneously cut China's interest rates and reserve requirement ratio, a move widely considered a gesture to forestall market declines.

The last time the central bank made such a concerted easing effort was back in late 2008, at the height of the global financial crisis.

The market seemed to finally be placated following news on Monday night that the country's pension fund has got the nod to go into the stock market and repeated assurance from the securities regulator that the stock market is still stable despite fluctuations.

The pension fund's managers can invest as much as 30 percent of its total assets in the stock market. This is a big sum, given that outstanding contributions to the fund stood at 3.06 trillion yuan (around 500 billion U.S. dollars) at the end of 2014.

The China Securities Regulatory Commission said on Monday night that risks from margin trading were controllable. On Friday, the outstanding volume of margin trading stood at 96.5 billion yuan, 4.3 percent less than two weeks ago.

The Securities Association of China said on Tuesday afternoon that the current over-the-counter share financing worth 500 billion yuan in the stock market would be allowed to stay, though it forbade any more such irregular financing.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, came in out of the cold on Tuesday as well, up 6.28 percent to end at 2,858.61 points.

Editor: xuxin

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