SHANGHAI stocks yesterday gained the most in nearly seven months as data showed that bank lending grew strongly in the first week of July while investors banked on hopes the central government may boost the economy.

The Shanghai Composite Index jumped 64.87 points, or 3.2 percent, to 2,072.99, the biggest single-day gain since December 14 when the barometer gained 4.3 percent.

The market rallied amid speculation the central government may introduce stimulus measures to revitalize the economy after Premier Li Keqiang reiterated the importance of stabilizing growth while encouraging economic restructuring.

"The tone of Li's speech suggested that the government's policy stance may soften in the second half of the year," Zhang Zhiwei, chief China economist at Nomura Holdings Inc, said in a note yesterday.

"The speech indicated Li is feeling under more pressure as the economic data continue to weaken and China may possibly not achieve its 7.5 percent growth target for 2013."

Lenders gained after the Shanghai Securities News reported that China's four biggest banks extended 170 billion yuan (US$28 billion) in new loans in the first week of July, compared with 270 billion yuan for the whole of June.

The Industrial and Commercial Bank of China Ltd, the nation's largest lender, rose 1.3 percent to 3.98 yuan. The Agricultural Bank of China gained 2.4 percent to 2.57 yuan.

Property developers surged on talk the government may soon relax refinancing curbs for them. Poly Real Estate, China's second-largest developer, jumped 6.1 percent to 11.32 yuan. Gemdale Corp rose 5 percent to 7.56 yuan.

In a reversal of what he said last month, Federal Reserve chairman Ben Bernanke on Wednesday hinted the US will keep its highly accommodative monetary policy "for the foreseeable future" as unemployment remains high and inflation is below the Fed's target.

Liu Qiyuan, a Qilu Securities analyst, said Bernanke's comment signaled less likelihood the massive bond-buying would wind down and eased concerns over external liquidity.

Gold stocks shone as gold prices hit a two-week high. Zijin Mining Group Co, the nation's biggest gold producer, sparked 2.7 percent to 2.64 yuan. Shandong Gold Mining Co added 6.6 percent to 23.36 yuan and Zhongjin Gold Corp rose 6 percent to 9.89 yuan.