The benchmark Shanghai Composite Index soared 3.47 percent to close at 4,560.77 points, the first close above 4,500. That marked a 16.56 percent growth in 11 trading sessions, and an increase of 70.47 percent so far this year after a 130 percent rally in 2006.

The Shenzhen Composite Index hit 1,323.40, an increase of 2.34 percent over the previous close.

Financial stocks were the largest contributors to the increases. China Merchants Bank and CITIC Securities jumped their daily limit of 10 percent, followed by an 8.52 percent rise in both China Minsheng Banking Corporation and Ping An Insurance of China.

China Life soared 6.88 percent to 50.98 yuan, while the Industrial and Commercial Bank of China surged to 5.82 yuan after a 4.3 percent increase. Bank of China rose 2.82 percent to 5.46 yuan.

Sinopec also drove up the market, after a 3.2 percent growth to 14.51 yuan, and Aluminum Corporation of China jumped 6.83 percent to 27.68 yuan.

In the real estate sector, China Vanke gained 7.03 percent to 33.79 yuan after Thursday's 10 percent growth.

The surge came as investors are opening a record high number of investment accounts in the Shanghai and Shenzhen stock exchanges.

On Thursday, a total of 730,092 accounts were opened, including 128,303 A-share accounts and 600,561 fund accounts, according to the China Securities Depository and Clearing Corp. The total number of accounts in the two bourses now stands at 110.81 million.

Also indicating investors' bullish sentiment, a survey by China Securities Association shows more than 60 percent of individual investors believe the bull market will continue to run through to the Beijing Olympics next August.

The same percentage of institutional investors have the same optimistic opinion.