SHANGHAI, China—China's shares climbed sharply Wednesday on strong corporate earnings reports and hopes for new government steps to support slumping stock prices.
The Shanghai Composite Index rose 4.8 percent to close at 3693.11 after a second straight day of gains. The Shenzhen Composite Index for China's smaller second market rose 4.0 percent to 1097.76.
The markets are closed from Thursday and Friday for the national May Day holiday and reopen on Monday.
"Talk of Beijing unveiling further market-boosting policies has been going on for a while, and investors used it as an excuse to buy on the last day of the month," said Guotai Junan Securities analyst Xu Yinhui.
Beijing tried last week to revive swooning markets by announcing a cut in the tax on trading and curbs on sales of previously nontradable shares that investors had worried might flood the market.
Even after last week's dramatic gains, though, the Shanghai index is still down 30 percent from the end of last year, and the Shenzhen index is off 24 percent.
But traders and analysts generally expected Beijing to wait until after the holiday to launch new measures.
"The positive impact of the stamp duty cut is still being felt, the markets aren't sagging and the Olympics is still 100 days away. If Beijing used a market-boosting tool now, it would have one less tool to use should the markets dive within the coming 100 days," said Mo Fan, an analyst at Soochow Asset Management.
Stock prices were also boosted Wednesday by strong earnings announced this week by major Chinese companies, said Everbright Securities analyst Shi Honglin.
Ping An Insurance jumped 6.1 percent after announcing Tuesday its quarterly profit rose 24 percent from a year earlier on growth in its insurance and banking businesses.
Tsingtao Brewery climbed 5.9 percent after it reported quarterly profit more than tripled on strong sales.
Oil refiners rose on hopes of more government aid to producers that are struggling with price controls, said Haitong Securities analyst Zhang Qi.
China's top two oil companies, PetroChina and Sinopec, said this week first-quarter profits fell sharply due to controls that bar them from passing on record global crude costs to consumers.
The government paid a subsidy to Sinopec to help cover heavy losses on refining and has promised both companies a tax rebate on fuel imports. PetroChina was up 5.9 percent, while Sinopec rose by the maximum daily 10 percent limit.
"It has become obvious by now that sizzle has returned to the markets," said Everbright Securities' Shi. "The markets are on their way up."
China's currency, the yuan, fell slightly to 6.9940 to the U.S. dollar. Traders said they expect the currency to remain firm in the near term.
