The Trump administration on Monday published a list of Chinese and Russian companies with alleged military ties that restrict them from buying a wide range of US goods and technology.
Liquor companies also jumped following year-end demand. China's largest liquor maker, Kweichow Moutai Co Ltd , was up 2.64% at midday break hitting its all-time highs.
SMIC said on Sunday that being put on a US trade blacklist would pose a significant adverse impact to its research and development in its 10-nanometer and more advanced chip technology.
Nasdaq said last week it will remove shares of four Chinese construction and manufacturing companies from indexes it maintains in response to a US order restricting purchase of their shares.
The index hit its highest since February 2018 earlier in the session, as investors cheered better-than-expected manufacturing data and hopes of continued economic recovery.
The blue-chip CSI300 index fell 0.4pc, to 4,960.25, while the Shanghai Composite index slipped 0.5pc to 3,391.76, reversing earlier gains as investors booked profits.
The blue-chip CSI300 index rose 3pc to 4,823.16, its best day since July 6, while the Shanghai Composite Index gained 2.6pc to 3,358.47 points, its best session since July 20.
The blue-chip CSI300 index was down 1.5pc, with its financial sector sub-index lower by 1.63pc, the consumer staples sector down 0.41pc, the real estate index down 1.33pc.
At the close, the Shanghai Composite index was up 0.37% at 3,333.16, while the blue-chip CSI300 index ended 0.5% higher after rising 2.1% earlier in the session.