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SHANGHAI, July 5 (Reuters) - China's blue-chips snapped a three-day losing streak on Wednesday, helped by a wider quota for Hong Kong institutional investors and a cabinet paper promoting the use of commercial pension money in capital markets.
The blue-chip CSI300 index rose 1.1 percent, to 3,659.68 points, while the Shanghai Composite Index gained 0.8 percent to 3,207.13 points.
An index tracking the 50 most representative blue-chips in Shanghai, dubbed China's "nifty 50", rebounded 1.5 percent.
Commercial pension funds are encouraged to invest in stocks, bonds and funds, in order to provide long-term stable support for the healthy development of capital markets, a policy paper dated July 4 from China's cabinet showed.
The policy is expected to bring more long-term funds into the stocks market, benefiting the blue-chips, favoured by institutional investors looking for solid fundamentals.
The mainland stock market also drew support from China's move to hike the quota under the Renminbi Foreign Institutional Investor (RQFII) scheme for Hong Kong to 500 billion yuan ($73.58 billion) to further meet their demand for yuan asset allocations.
As a pioneer to promote yuan internationalisation, Hong Kong was given a 270 billion yuan quota under the RQFII scheme in 2011.
"The robust run-up in big-caps is not over yet, and the RQFII hike could have a positive impact on the (mainland) stock market," said Zhang Qi, a Haitong Securities analyst.
Sectors rallied across the board, with financials leading the advance.
The policy paper mentioned above helped lift the shares in insurers most, with bellwether New China Life Insurance surging 7.3 percent to end at an 18-month high. ($1 = 6.7952 Chinese yuan) (Reporting by Luoyan Liu and John Ruwitch; Editing by Richard Borsuk)