SHANGHAI stocks yesterday posted the biggest daily gain in nearly four months after Premier Li Keqiang stressed the need to stabilize growth while promoting reforms.

The Shanghai Composite Index rose 42.67 points, or 2.17 percent, to 2,008.13, the biggest single-day advance since March 20.

The market gained after Li said on Tuesday that growth and structural reforms should go in tandem because steady growth provides conditions for restructuring which in turn creates potential for economic growth.

"Li's words on economic growth fuelled expectations that the government may boost the economy with stimulus measures," Shenyin and Wanguo Securities said.

The market gained despite a 3.1-percent drop in China's exports from a year earlier in June, the first annual drop since January 2012, and a 0.7-percent dip in imports after shedding 0.3 percent in May. Analysts said the market has already priced in the dismal data and is banking on structural reform to boost to economic development.

Inner Mongolia Baotou Steel Rare-earth (Group) Hi-tech Co, China's biggest producer of rare earth materials, surged by the daily limit of 10 percent to 23.24 yuan (US$3.79). Xiamen Tungsten Co also jumped 10 percent to 30.03 yuan.

China Petroleum & Chemical Corp soared 6.5 percent to close at 4.61 yuan.