UPDATE 1-China shares up but small caps dive on price manipulation probe
* SSEC +0.7 pct, CSI300 +0.3 pct, ChiNext -5.4 pct
* Utilities, banks rise sharply
* Regulator's announcement hits small caps broadly (Adds stock regulator investigation from Friday)
SHANGHAI, Dec 22 (Reuters) - China stocks closed up on Monday in volatile trade as electrical utilities rose and banks spiked, but gains were capped by news that the stock regulator was investigating a group of small-cap shares.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 0.3 percent, to 3,394.48 points, while the Shanghai Composite Index gained 0.7 percent, to 3,127.44 points.
However, small-cap shares took hits following the China Securities Regulatory Commission's announcement on Friday that it was looking into illegal stock-price manipulation of 18 shares.
The ChiNext growth company index suffered a 5.4 percent decline, its steepest drop since 2013.
The announcement sparked a wide evacuation from small caps, with 270 company shares hitting their maximum down 10 percent on Monday. That resulted in a nearly 4 percent slide on the Shenzhen board, where most of the companies are listed.
Rumours had been circulating in the market that CSRC was investigating excessive margin trading and other irregularities by market insiders in the aftermath of a dramatic rally in Chinese stock indexes since November. Continuación...