SHANGHAI stocks posted the first gain in three days on the expectation that Chinese lenders will extend more new yuan loans this month than in February.

The benchmark Shanghai Composite Index edged up 0.16 percent to 2,301.26 points with a daily turnover of 85.7 billion yuan (US$13.8 billion).

"The market was partly boosted by the optimism that Chinese banks will issue more loans in March," Shenyin & Wanguo Securities said today.

China's four largest state-owned lenders - Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, and Bank of China - issued 83.8 billion yuan of new loans over the past week, data from the brokerage showed.

The increase brought the total new lending to 228 billion yuan as of March 24, up from 207 billion yuan in the same period last month.

This has eased concern that China's central bank will tighten credit this month due to weak demand.

The broker expected Chinese financial institutions to issue about 850 billion yuan of new loans in March - compared to 620 billion yuan in February.

Transport-related stocks gained after the National Development and Reform Commission, China's top planning agency, yesterday issued guidance for the development of multimodal transportation hubs in 42 cities.

Hainan Airlines Co advanced 1.5 percent to 4.63 yuan. Shanghai Shentong Metro Co climbed 2.4 percent to 6.84 yuan.

Distilleries fell the most. Kweichow Moutai Co, a leading producer of high-end liquor in China, lost 1.8 percent to 166.79 yuan. Shanxi Xinghuacun Fen Wine Factory Co slumped 7.4 percent to 32.21 yuan. Sichuan Tuopai Shede Wine Co slipped 6.1 percent to 19.78 yuan.