SHANGHAI stocks inched up yesterday as solar firms continued a strong run following the central government's plan to boost the sector.

The benchmark Shanghai Composite Index closed 0.31 percent higher at 2,065.72 points, also aided by expectations that more stimuli may be unveiled to spur growth in the world's No. 2 economy.

Gains by solar firms helped the index rebound for a second straight day after China unveiled plans to support domestic solar panel manufacturers who are struggling with overcapacity and the ongoing trade rows between China and the United States and the European Union.

China, the world's largest solar panel producer, is aiming for a fivefold increase in the country's solar power generating capacity to 35 gigawatts by 2015, according to a statement on the central government's website.

TDG Holding Co surged by the daily limit of 10 percent to 5.58 yuan. Xi'an Longi Silicon Materials Co also jumped 10 percent to 11.55 yuan.

"China's short-term policy target is likely to shift from risk prevention to stabilizing growth as the economic expansion rate approaches the bottom line set by the central government," CITIC Securities said in a note yesterday.

"This expectation is giving a boost to market sentiment and pushing a recovery in A shares, especially blue chips that have been undervalued," the broker said.

Railway stocks surged amid media reports that the government is likely to resume investment in high-speed rail infrastructure projects.

Gem-Year Industrial Co, a provider of railway bolts and parts, leaped 10 percent to 8.34 yuan. Jinxi Axle Co Ltd, a maker of railway transportation devices, advanced 8.2 percent to 12.11 yuan.