SHANGHAI, March 11 (Reuters) - Chinese shares rebounded on Monday, after suffering heavy losses in the previous session, after the central bank governor pledged more support for a slowing economy.
** The Shanghai Composite index closed up 1.92 percent at 3,026.99 points. The blue-chip CSI300 index was up 1.98 percent, with its financial sector sub-index higher by 0.64 percent. ** Gains were driven by statements from People’s Bank of China (PBOC) Governor Yi Gang, who said on Sunday that the PBOC’s “prudent” monetary policy will emphasise counter-cyclical adjustments, using a phrase that implies the need to fight an economic slowdown. ** China’s factory-gate inflation in February stayed flat from a month earlier, while gains in consumer prices slipped to the lowest level in more than a year as muted price pressures point to lacklustre demand in the world’s second-largest economy. ** Yi said there is still some room for the PBOC to cut reserve requirement ratios, and said the bank will work on lowering risk premiums that have kept lending rates for small firms relatively elevated. ** Weak data coming after recent gains means the market is still facing pressure, analysts at Dongguan Securities said in a note. “But during the two sessions (of parliament) period, policy will remain positive,” they said. ** Chinese banks made 885.8 billion yuan ($131.77 billion) in net new yuan loans in February, down sharply from a record 3.23 trillion yuan in January, though the drop was likely due to seasonal factors. ** “Considering that the main external central banks are all turning toward loosening, and that domestic credit growth still requires government support, monetary policy will continue to be relatively loose,” analysts at Zheshang Securities said in a note. The analysts said that weakness in loan data indicates that companies have weak interest in expanding production or investment. ** Adding to hopes over talks to end a damaging trade war with the United States, Chinese Vice Commerce Minister Wang Shouwen said on the weekend that China and the United States are still working day and night to achieve a trade deal that matches the interests of both sides and the hopes of the world, including eliminating tit-for-tat tariffs. ** The smaller Shenzhen index ended up 3.9 percent and the start-up board ChiNext Composite index was higher by 4.431 percent. ** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.42 percent, while Japan’s Nikkei index closed up 0.47 percent. ** At 07:19 GMT, the yuan was quoted at 6.7229 per U.S. dollar, 0.04 percent weaker than the previous close of 6.72. ** The largest percentage gainers in the main Shanghai Composite index were China XD Electric Co Ltd, up 10.1 percent, followed by Tianjin Hi-Tech Development Co Ltd , gaining 10.1 percent and Ningbo Zhoushan Port Co Ltd, up by 10.1 percent. ** The largest percentage losers on the Shanghai index were Shanghai DZH Ltd down 10.02 percent, followed by Eastern Communications Co Ltd losing 9.99 percent and Hualing Xingma Automobile Group Co Ltd down by 9.96 percent. ** So far this year, the Shanghai stock index is up 21.4 percent and the CSI300 has risen 23.9 percent, while China’s H-share index listed in Hong Kong is up 11.3 percent. Shanghai stocks have risen 2.93 percent this month. ** About 42.62 billion shares were traded on the Shanghai exchange, roughly 145.8 percent of the market’s 30-day moving average of 29.24 billion shares a day. The volume in the previous trading session was 57.79 billion. (Reporting by Andrew Galbraith; Editing by Rashmi Aich)