Shanghai Shares at 2-Week High

Markets Reuters

(Reuters)

China's main share index ended at a two-week high on Monday, but pared some of its earlier gains in thin turnover as investors were reluctant to stake out fresh positions ahead of the country's biggest holiday.

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Most sectors were largely unchanged but gains were led by the materials sector, underpinned by a broadly weaker U.S. dollar.

The Shanghai Composite Index gained 0.4 percent to 3,136.77 points while the blue-chip CSI300 index rose 0.3 percent, to 3,364.08 points.

The People's Bank of China said on Friday it would provide temporary liquidity support for 28 days to several major banks to address seasonal liquidity stress ahead of the Lunar New Year, a new policy tool designed to ease cash shortages.

The stock market will be closed from Jan. 27 to Feb 2.

State media reported on Monday that the move signaled stable and neutral monetary policy.

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"Given the rising inflation and stable growth, the focus of monetary policy is unlikely to move away from containing financial risk for now," Larry Hu and Jerry Peng from Macquarie Securities wrote in a research note.

Among best thematic gainers were defense stocks , which added 1.3 percent, after news President Xi Jinping would head a new commission overseeing joint military and civilian development.

(Reporting by Luoyan Liu and John Ruwitch; Editing by Jacqueline Wong)