China stocks ended a thinly-traded week with modest gains on Friday after a private survey suggested domestic and export demand may be slowly picking up.
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The blue-chip CSI300 index rose 0.3 percent to 3,253.28, while the Shanghai Composite Index gained 0.2 percent to 3,004.70 points.
But for the month, CSI300 dropped 2.2 percent while SSEC was down 2.6 percent, its worst monthly performance since January.
For the quarter, CSI300 was up 3.2 percent, while SSEC rose 2.6 percent.
Chinese factory activity expanded in September as orders ticked up, though the improvement was marginal and manufacturers continued to shed jobs, a private business survey by Caixin/Markit showed on Friday.
The report followed a spate of August data that suggested China's economy is stabilizing and perhaps even improving thanks to a government infrastructure building spree and a booming housing market.
"This suggests that the positive momentum seen in the activity and inflation data over the past few months will likely be sustained," Julia Wang, HSBC's Greater China economist, said in a note.
China's financial markets will be closed all of next week for "Golden Week" holidays, which has sapped turnover this week. But some investors are betting on a post-holiday bounce due to a number of factors.
Demand for yuan-denominated assets may pick up after the formal inclusion of the yuan in the International Monetary Fund's SDR reserve basket from Oct. 1, traders said.
That could ease depreciation pressure on the yuan currency and related fears of renewed capital outflows.
Growing restrictions on heated property markets imposed by city governments across China could also see some money move back into the stock market, traders said.
Most sectors rose, with property and consumer stocks leading the gains.
(Reporting by Samuel Shen and John Rutwitch; Editing by Kim Coghill)