BEIJING - Chinese shares rallied with major indices surging during the morning session on Monday due to strong market expectations for the reform of state-owned companies.

The benchmark Shanghai Composite Index rose 3.2 percent to stand at 3,864.1 points when morning trading closed, while the smaller Shenzhen Component Index climbed to 13,106.46 points, up 2.77 percent from the previous trading day.

The strong performance may be linked to high market expectations over the reform of state-owned enterprises (SOE). Media reports said Monday that China's central authority has approved an ambitious plan to reorganize its SOEs to improve their competitiveness in an increasingly liberalized market.

Listed companies of Chinese SOEs rallied. Shipbuilder and aircraft manufacturer shares led the rise. China CSSC Holdings Ltd, a leading ship maker, jumped by the daily 10-percent limit.

The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, surged 3.63 percent to reach 2,670.5 points by the end of morning session.