2nd LD-Writethru: China stocks rebound as regulators deny support withdrawal

Chinese shares rose on Wednesday as regulators promised ongoing support for the market following a sharp drop on Monday.

The benchmark Shanghai Composite Index climbed 3.44 percent to close at 3,789.17 points. The smaller Shenzhen Component Index went up 4.11 percent to close at 12,823.07 points.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, gained 4.33 percent to end at 2,693.87 points.

The China Securities Regulatory Commission said on Tuesday that it is investigating possible irregularities in Monday's huge sell-off that gave the benchmark index its worst day in eight years.

The one-sentence statement came after the sell-off sent the benchmark Shanghai Composite Index down by 8.48 percent, its steepest daily drop since Feb. 27, 2007.

On Monday, the commission denied that the national margin trading service provider has backed off from stabilizing the stock market, as had been rumored.

After the massive sell-off since mid-June, the Chinese government has unveiled a slew of measures to prop up the market, including reducing the number of new shares to avoid a shares glut, a police crackdown on short-selling and a six-month ban on big shareholders selling stocks.

Before the market took a downturn on June 12, the Shanghai composite had risen by 152 percent since July 2014 and nearly 60 percent since the beginning of the year, galloping far ahead of economic fundamentals during the period.

This week's equity sell-off should have only a limited impact on China's economy and monetary policy easing will continue as the economic recovery is slow, said a Nomura research note. Endi