Investors have shown strong confidence in China's financial stocks, although foreign brokerage JPMorgan Chase & Co has advised reducing holdings in Chinese stocks and said China's bank stocks will fall.

Stocks soared in both Shanghai and Shenzhen markets on the Chinese mainland on Wednesday, led by securities companies and banks, sending the benchmark Shanghai Composite Index back to the 2,300 level. The index jumped 59.94 points, or 2.66 percent, to 2,317.37 points, the biggest gain since Jan 14. Trading volume was 10 percent higher than the 30-day average, while the 30-day volatility increased to its highest level since February 2012.

The Shenzhen Component Index closed at 9,317.97 points, up 3.14 percent, while the Hang Seng China Enterprises Index - mainland companies traded in Hong Kong - increased 2.22 percent.

The increases were driven by positive news from the securities companies and from China's central bank, analysts said.

The share prices of securities firms have been rising since Monday because of news that such companies will be able to set their own minimum-fund limits for investors to start short-selling and margin trading.

The securities companies soared 5.6 percent on average on the news, led by Founder Securities Co Ltd, with a 9.94 percent increase.

The banking regulator encouraged small banks to focus on branches' loan-to-deposit ratios using the average daily level each month, the 21st Century Business Herald reported.

China Citic Bank Corp climbed the maximum-allowed 10 percent on Wednesday to its highest level since Feb 4, leading a 3.86 percent surge in the gauge of banking stocks.

"China's banking stocks account for more than half of the listed companies' profits in the stock market, but their market valuation is still low," said Li Daxiao, head of the research department at Yingda Securities.

"Thus, the financial stocks, including securities and banking stocks, still have room to increase."

Li added: "The adjustment of China's stock market is sufficient in this round. This is the second reason to boost the rise of the financial stocks on Wednesday."

In addition, there is some related financial news to push the increase of China's stocks on Wednesday, analysts said.

Chinese residents showed more willingness to invest in the first quarter this year, according to a survey launched by the nation's central bank on Tuesday.

And the prices of food dropped this week, the fourth week in a row, the Ministry of Commerce announced on Tuesday.

The drop of food prices will help stop the rise of the consumer price index, said Kuang Ye, an analyst in the financial research department of AVIC Securities Co Ltd.

"The surge in China's stock market on Wednesday may be due to a large funds flow into the stock market," said Yang Delong, the chief analyst of strategic department at China Southern Fund Management Co Ltd.

Yang said the second round of the rebound is not far off.

"China's stock market is in an adjustment period. The stock market is expected to usher in the second wave of the rebound in the second quarter, supported by China's economic recovery," he said.

"And this is also the best opportunity for those domestic and foreign investors to invest in the market again."

huangtiantian@chinadaily.com.cn