Stocks rebound on healthy loan data in cautious trade

The mainland stocks rebounded yesterday as strong loan data outweighed news that China had slipped into deflation for the first time in over six years.

The National Bureau of Statistics said that new yuan lending by Chinese banks remained very high at above 1 trillion yuan in February, though down from January's huge 1.62 trillion yuan.

This kept alive hopes for an early economic recovery and suggested potential fund supply to the stock market would remain ample. Some of the money from January's lending surge, much of it raised via short-term corporate bill financing, went to buy stocks, helping to trigger a market rally in early February.