Shanghai stocks continued to rise for the second consecutive day as investors expected more funds to be channeled into the capital market.

The Shanghai Composite Index jumped 1.2 percent to a two-week high of 2,231.17 points today.

The China Securities Regulatory Commission plans to raise the lower limit of equity fund stock position from current 60 percent to 80 percent, according to a statement the regulator released before the May Day holiday.

"The new regulation of fund management to be effective in June will channel about 10 billion yuan (US$1.6 billion) into the stock market," Western Securities said in a research note.

"In addition, more quotas for the Renminbi Qualified Foreign Institutional Investor (RQFII) scheme will provide ample liquidity support for the market," the brokerage firm said.

The RQFII scheme allows foreign investors to use yuan raised overseas for trading in the domestic securities market. Currently only 70 billion yuan out of 270 billion yuan of quota was given to qualified investors by the end of March, according to the State Administration of Foreign Exchanges.

Commodity producers rallied after the United States showed more signs of economic recovery. Jiangxi Copper Co, China's biggest producer of the metal, jumped 3.6 percent to 21.33 yuan, after the metal gained the most since September by 4 percent last week.

Yunnan Copper Industry Co, the fourth-largest producer of the metal, advanced 3.2 percent to 12.51 yuan.

Zijin Mining Group Co, China's biggest mining company, rose 1.3 percent to 3.14 yuan.