China stocks rise sharply on signs of fresh government support

SHANGHAI (Reuters) - China stocks surged on Friday, encouraged by strong gains on Wall Street and signs of fresh support from Beijing after a five-day plunge that panicked global markets. The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 4.3 percent, to 3,342.29 points, while the Shanghai Composite Index gained 4.9 percent to 3,232.35 points. For the week, the SSEC lost 7.9 percent and the CSI300 fell 6.9 percent. China's local pension funds will start investing 2 trillion yuan ($313.05 billion) as soon as possible in stocks and other assets, senior government officials said on Friday. The central bank was also seen intervening for a second day to stabilise the yuan currency to reduce market expectations of further yuan depreciation, traders said. China's surprise currency devaluation in mid-August and a survey showing deteriorating factory activity helped trigger a savage selling spree which at one point drove stocks down more than 20 percent within a week. All main stock sectors rose on Friday. Banking stocks, which surged on Thursday, underperformed the market after top lenders this week reported virtually no growth in profits in the first half of the year and a further increase in bad loans, adding to worries about the economy. (Reporting by Samuel Shen and Pete Sweeney; Editing by Kim Coghill)