China stocks surge for 2nd day as government support calm nerves

China stocks bounced sharply for the second day on Friday, reversing an early-week slump in frenetic trading as markets regained a measure of composure following several government support steps to stem the rout.

China stocks made a sharp comeback for the second day on Friday, reversing an early-week slump in frenetic trading as markets regained a measure of composure following several government support steps to stem the rout.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 5.4%, to 4,106.56, while the Shanghai Composite Index gained 4.6%, to 3,877.80 points.

For the week, the CSI300 was up 5.7% and the Shanghai Composite rose 4.5% their first weekly gains since mid-June.

"Chinese investors move in herds. After panic selling drove the market down to the extreme, prices are now starting to move in the other direction," said Samuel Chien, a partner of Shanghai-based hedge fund manager BoomTrend Investment Management Co.

The relative calm in mainland markets followed a flurry of government measures this week as policy makers scrambled to put a floor under a stock market that had tumbled around 30 percent in just three weeks, wiping trillions of dollars off the market value.

Only six stocks fell on Friday, while shares of 1,452 listed companies rose, most of them hitting the upward limit of 10%.

Around 1,300 of China's listed companies - nearly half the market - remained suspended after a scramble by firms earlier in the week to escape the carnage by having trading in their stock halted. About 60 companies resumed trading on Friday. Banking heavyweights underperformed the broader market, with the CSI300 bank index up only 0.8%.