SHANGHAI: China stocks finished higher on Monday with Shanghai's Nasdaq-style STAR Market leading gains after securities regulator approved the first batch of exchange-traded funds (ETFs), which are expected to draw fresh funds towards the market.

Analysts said investor sentiment was also supported by recent upbeat economic data, suggesting broad economy was bouncing from the coronavirus shock faster than expected.

Shanghai's tech-focused STAR50 index was up 2.7%, while the start-up board ChiNext Composite index was higher by 1.4%. China Asset Management Co (ChinaAMC), E Fund Management Co and Huatai-PineBridge Fund Management Co said in separate notes on Friday that they had received regulatory approval to launch ETFs tracking the benchmark STAR50 index.

The Shanghai Composite index was up 0.57% at 3,278.81. The blue-chip CSI300 index closed 0.51% higher.

The largest percentage gainers in the main Shanghai Composite index were Zhejiang Orient Financial Holdings Group Co Ltd, up 10.08%, followed by Lanpec Technologies Ltd, gaining 10.06% and WPG (Shanghai) Smart Water Public Co Ltd, up by 10.02%.

So far this year, the Shanghai stock index is up 7.5% and the CSI300 gained 13.5%, while China's H-share index listed in Hong Kong is down 12%. Shanghai stocks have declined 3.44% this month.

Sentiment was improved by encouraging economic data that showed the world's second-largest economy was on track recovering from the oronavirus crisis. New home prices in China rose at a slightly faster monthly pace in August, as consumer demand showed signs of picking up.

Chinese banks extended more new loans in August than expected, while broad credit growth quickened, pointing to continued policy support as the economy recovers from a record coronavirus-induced slump.