Chinese stocks rose on Tuesday to their highest in nearly three months, as a series of government measures and improving economic data revived investor appetite for riskier assets, but thin volumes indicated that confidence remained fragile.
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The blue chip CSI300 index rose 1.3 percent, to 3,264.49, while the Shanghai Composite Index gained 1.4 percent, to 3,053.07 points. Both indexes closed at their highest since Jan. 8.
Beijing has unveiled policies to aid China's struggling economy, including more infrastructure investment, tax reforms and plans for debt-to-equity swaps to help ease banks' troubled loan portfolios.
All main sectors rose, with banking stocks underperforming the market as investors weighed the impact of the potential debt-to-equity swap scheme.
Chinese media group Caixin reported on Monday, citing an unnamed policy banking source, the scheme was expected to "resolve" 1 trillion yuan ($154.4 billion) in potential bad banking debt in three years or less.
Swapping debt into equity might get bad loans off lenders' books, but analysts and some bankers are concerned there was a danger of simply converting bad debt into bad equity.
(Reporting by Samuel Shen and Nathaniel Taplin; Editing by Jacqueline Wong)