The Shanghai Composite Index closed up 0.3% at 3,236.03 points.

The blue-chip CSI300 index added 0.1%, with its financial sector sub-index higher by 0.5% and energy sector adding 1.3%.

In Hong Kong, the benchmark Hang Seng Index gained 1.2% at 19,522.89.

Sentiment was largely upbeat across Asia as traders raised bets on potential rate cuts by the Federal Reserve (Fed) this year following an easing in core US inflation.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 1.3%, while Japan’s Nikkei Index closed up 0.3%.

Investors are now anticipating more easing measures from Beijing after state media reported that China’s central bank may cut banks’ reserve requirement ratio (RRR) before the Spring Festival at the end of this month.

As room for interest rate cuts is curtailed by the yuan depreciation pressure, an RRR cut could send a clearer signal to ease the policy void until March, and is a straightforward instrument to offer permanent liquidity, analysts at Bank of America said in a note to clients.

The markets are also awaiting a set of key economic data due on Friday, including fourth-quarter and full-year 2024 GDP data.

This will also include December’s industrial output and investment and consumption figures, to gauge China’s economic recovery and the effectiveness of Beijing’s support package.

Limiting gains today, chip stocks declined 0.6%, with AI firm Cambricon Technologies tumbling nearly 15% after the US escalated its tech curbs and added more Chinese entities to a restricted trade list.

The property sector also weakened before easing losses, as developer China Vanke faced renewed scrutiny over its debt repayment capabilities amid a challenging property market.

Five of its yuan bonds plummeted over 20% today, leading to trading suspensions.