Share prices rose on Thursday in Shanghai, sending the benchmark index to a three-month high, as a jump in the nation's manufacturing gauge spurred optimism the government will meet its economic growth target for this year.

Industrial Bank Co and Poly Real Estate Group Co gained more than 5 percent to lead a rally for lenders and developers. Sinolink Securities Co surged 5.9 percent on speculation new share sales will boost earnings. Ping An Insurance (Group) Co, China's second-biggest insurer, advanced to a three-month high in Hong Kong. A preliminary Purchasing Managers Index from HSBC Holdings Plc and Markit Economics, known as the flash PMI, was at an 18-month high of 52, compared with the 51 median estimate.

The Shanghai Composite Index rose 1.3 percent to 2,105.06 points. The measure jumped to the highest since April 16 on optimism over the economy after the government accelerated spending, allowed some local governments to loosen property curbs and cut reserve requirement ratios for some lenders.

HSBC PMI picks up as policy easing kicks in

Renewed optimism lifts equities

"The PMI data indicate the decline in economic growth halted and the economy is recovering," said Wei Wei, an analyst at West China Securities Co in Shanghai. "The relaxation by local governments of home purchase restrictions will add to the strength of the economy. That's all positive for stocks."

The CSI 300 Index rose 1.8 percent, adding to this month's 3.3 percent gain. The ChiNext Index slumped 1.6 percent, extending losses to 9.5 percent in July.

China's "old economy" stocks in State sectors such as commodities and finance have rebounded on signs looser credit and faster spending are stabilizing the economy. Last year's rally in "new economy" companies in industries such as technology and healthcare faltered amid concerns that valuations are excessive.

The CSI 300 and benchmark Shanghai Composite are valued at no more than 8.3 times 12-month projected earnings, compared with the multiple of 28.4 for the ChiNext, according to data compiled by Bloomberg.

A measure of financial stocks including banks, developers and brokerages jumped 3.1 percent, the most among the CSI 300's 10 industry groups. China Construction Bank Corp gained 1.5 percent. China's one-year interest rate swaps dropped for a fourth day after the central bank refrained from draining money from the banking system amid cash demand boosted by share sales.

China Vanke Co, the biggest developer in the country, advanced 4.1 percent. The southwestern city of Chengdu has eased home purchase restrictions, China Central Television reported on its micro blog, citing unidentified property developers.

Haikou in southern China, Hohhot in the north and Jinan in the east have already loosened property curbs.

"The housing market had quite a serious correction and the authorities have taken very modest selective steps to support the market," Steven Bell, an economist at London-based F&C Asset Management Plc, said.

Changjiang Securities Co soared 10 percent, and Sinolink Securities climbed the most since May 28. Four companies were selling initial public offering shares on Thursday, bolstering the earnings outlook for brokerages.

Ping An Insurance jumped for a third day in Hong Kong, adding 4.1 percent. UBS AG, JPMorgan Chase & Co, Blackstone Group and others spent more than HK$2 billion ($258 million) buying about 36 million Ping An H shares in the first two weeks of this month, Great Wisdom reported on its micro blog, without saying where it got the information.

"The insurance industry has strong fundamentals," said Tina Sun, an analyst at Shenyin Wanguo Securities Co.