BEIJING -- Chinese shares closed higher on Thursday led by strong performance of shares in the banking, insurance, and securities industries.

The benchmark Shanghai Composite Index surged 1.78 percent to finish at 3,349.32 points. The Shenzhen Component Index gained 0.96 percent to close at 11,635.59 points.

Combined turnover on the two bourses amounted to 732.68 billion yuan ($118.91 billion), higher than the previous trading day's 643.72 billion yuan.

Gao Xiang, an analyst with CITIC Securities, said financial shares surged on the news that the State Council, China's cabinet, has approved a plan to replace trillions in local debt, stabilizing the market expectations for bank shares.

All bank shares saw rises as Industrial Bank, Bank of Ningbo and Bank of Nanjing rose by the daily limit of 10 percent, and half of the sector surged over 5 percent.

Insurance shares performed well, with New China Life Insurance up 9.31 percent and China Life Insurance up 4.45 percent.

Securities firm shares rose, with Sealand Securities jumping 5.96 percent and China Merchants Securities closing up 3.56 percent.

The coal sector also saw rises as its sub-index went up 0.79 percent. Yang Quan Coal Industry rose 4.17 percent and China Shenhua Energy climbed 2.91 percent.

Meanwhile, shares related to nuclear energy, Internet security and industrial reform performed well.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, lost 0.87 percent to end at 2,018.13 points.