China’s benchmark stock index capped the biggest gain since 2009 in volatile trading as the government battled to restore investor confidence in a market that lost $3.9 trillion in less than a month.

The Shanghai Composite Index jumped 5.8 percent to 3,709.33 at the close, erasing a loss of much as 3.8 percent. About 600 stocks rose by the daily 10 percent limit on the benchmark index. Another 1,439 companies were halted on mainland exchanges, locking sellers out of 50 percent of the market.

Officials have unveiled market-boosting measures almost every night over the past two weeks to reverse the rout in the world’s second-largest stock market. Regulators late Wednesday bannedmajor stockholders from selling stakes in listed companies, while announcing Thursday banks can roll over loans backed by shares. China’s public security bureau is also stepping in to investigate “malicious” shorting of stocks, the official Xinhua News Agency reported Thursday.

“As China beefs up its efforts to rescue the market with even the public security ministry involved, market sentiment is recovering slightly,” said Qian Qimin, an analyst at Shenwan Hongyuan Group Co. in Shanghai. “The rise today may help ease some selling pressure when companies resume their shares from trading, but whether it’s sustainable will depend on what policies are coming next.”

David Fuller's view

Responses to China’s stock markets in recent months have included some 1929 analogies from Western commentators, which seem unnecessarily gloomy.  Yes, some of the tactics used sound as if they come from a financial video game.  Nevertheless, many markets are managed to some extent and not just in developing countries.  Moreover, they are gamed by aggressive investors, not to mention HFT programmes.

I think financial ministers and regulators in many democratic countries would welcome the unrestrained power and influence of President Xi Jinping’s government and it’s China Securities Regulatory Commission, at least secretly if not publicly.  Moreover, I imagine China’s leaders feel they can improve on Wall Street’s Lehman Moment.  I wish them well.