However, in Hong Kong, the benchmark Hang Seng Index .HSI slipped 0.62% to 21,859.79 points at close, while Chinese H-shares listed in Hong Kong .HSCE edged down 0.36% to 7,666.88 points.

By the end of the session, Shanghai Composite index .SSEC rose 1.1% to 3,398.62 points, while blue-chip CSI300 index .CSI300 gained 1.44% to 4,485.01 points. Both indexes recorded their biggest monthly gains since July 2020.

Gains across the board came as official data showed that China’s factory and service sectors snapped three months of activity decline in June, as authorities lifted a strict COVID lockdown in Shanghai, reviving output and consumer spending.

China’s central bank needs to keep cuts to interest rates and banks’ reserve requirement ratio among its policy options while waiting for the economy to bounce back, said Guan Tao, a former senior official at the country’s foreign exchange regulator.

Analysts said hopes for more stimulus measures, including monetary easing, continued to lend support to markets.

“In the early stage of economic recovery, regardless of the pace of growth, monetary policy at least favours an easing bias,” said Zhang Jingjing, chief macro analyst at China Merchants Securities.

The latest easing of coronavirus travel rules combined with other encouraging policy signals have begun to lure some foreign investors back to Chinese stocks, raising the chances that the market can sustain its bounce after months of heavy selling.

Official data showed that foreign investors bought 139.15 billion yuan ($20.79 billion) of China stocks this month through the Stock Connect scheme, the most this year.

Tourism and liquor sectors were among the biggest winners as easing coronavirus restrictions boosted investor sentiment. An index tracking tourism-related companies .CSI930633 jumped 4.1% at close.

CSI liquor .CSI399997, a gauge that measures the performance of spirits producers, rose 3.74% on Thursday. Wuliangye Yibin Co Ltd 000858.SZ jumped 5.17% to 201.93 yuan, while Kweichow Moutai 600519.SS surged 1.83% to 2,045 yuan at the close.

(Reporting by the Shanghai Newsroom; Editing by Sherry Jacob-Phillips and Amy Caren Daniel)