Equities to Witness 'Post-holiday Rebound'

"Expectations of continued government tightening will ease as growth may be weaker than market forecasts," Yu Jun, an analyst at CITIC Securities Co, the largest Chinese brokerage, said in a report. Investors should buy Chinese shares as the government may lend support to some industries such as the property market after economic growth slows in the second quarter, wrote rival Shenyin Wanguo Securities Co analysts Chen Jie and Yuan Yi.

After rallying 80 percent last year, the Shanghai Composite Index has declined 11 percent in 2010 on government measures to control loan growth and prevent asset bubbles.

The benchmark index fell 4.23, or 0.1 percent, to 2,935.17 at the close after swinging between gains and losses more than 10 times.

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