Shares edge higher as selloff seen as excessive

Stocks staged an afternoon recovery to edge higher amid speculation that a selloff that sent the benchmark equity gauge to its steepest loss in six weeks was excessive. Automobile and utility companies led gains.

The Shanghai Composite Index rose 0.1 percent at the close, after dropping as much as 0.8 percent. SAIC Motor Corp climbed for a third day to pace carmakers higher, while China Yangtze Power Co rose to its highest level this year.

The advance comes after stocks sank on Wednesday on concerns that regulators would restrict investments in equities. The China Banking Regulatory Commission is said to be planning a crackdown on the $3.5 trillion wealth management product market. The initial draft states that cash from "mass market" wealth products can only be invested in money or bond markets, and not in domestically listed shares, said a person with direct knowledge of the matter.