SHANGHAI - Stocks on the Chinese mainland rose for a fourth day in a row on speculation that Shanghai, the nation's financial center, will relax property curbs to prevent slumping home prices from undermining the world's second-biggest economy.

China Vanke Co and Poly Real Estate Group Co led a gauge of property companies to its highest level in three months after the Shanghai Securities News reported the city eased some home purchase restrictions.

Industrial & Commercial Bank of China Ltd and Bank of China Ltd slid after the same paper said lending by the four biggest banks may be down from January.

The Shanghai Composite Index climbed 22.16 points, or 0.9 percent, to 2403.59 at the end of trading, the highest close since Nov 29. The CSI 300 Index rose 1.4 percent to 2597.48. The Bloomberg China-US 55 Index, the measure of the most-traded US-listed Chinese companies, retreated 2 percent on Tuesday in New York.

"We will see policy easing and liquidity improving throughout February," said Li Jun, a strategist at Central China Securities Co in Shanghai. "What we need to closely watch out for is coming economic data to verify the market expectations about an improvement in the economy."

The Shanghai Composite has rebounded 9.3 percent this year. The measure trades at 9.9 times estimated earnings, compared with a record low of 8.9 times on Jan 6, according to weekly data compiled by Bloomberg.

A gauge of property companies in the Shanghai Composite surged 2.8 percent, the highest close since Nov 2.

Vanke, the nation's biggest listed property developer, gained 3.4 percent to 8.19 yuan. Poly Real Estate, the second-biggest, advanced 2.7 percent to 11.28 yuan. Gemdale Corp gained 3.9 percent to 5.65 yuan.

Non-local residents in Shanghai are now qualified to buy second homes once they have held residence permits for 3 years, the Shanghai Securities News reported on Wednesday, citing the city's housing regulator. Residence permit holders previously were not allowed to buy second homes in Shanghai, the newspaper said, citing an announcement from Feb 1.

Banks decline

"With a meaningful rebound of domestic demand not in sight, external weakness is starting to bite, adding more downside risks to growth," Qu Hongbin, a Hong Kong-based economist for HSBC, said in a statement on Wednesday.

ICBC, the biggest lender, fell 0.5 percent to 4.44 yuan. Bank of China dropped 0.7 percent to 3.06 yuan.

China's four biggest banks lent a combined 70 billion yuan in the first three weeks of February, Shanghai Securities News reported, citing an unidentified person familiar with the matter.

February lending by the four banks may be lower than in January, the newspaper cited a China International Capital Corp report as saying. New lending was 738.1 billion yuan last month.

Bloomberg News