SHANGHAI, April 22 (Reuters) - Chinese stocks climbed to fresh seven-year highs on Wednesday, with investors emboldened by a commentary in state media saying the bull market "has just begun", and that there was no bubble.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 2.6 percent to 4,739.81 points, while the Shanghai Composite Index gained 2.5 percent to 4,398.49 points.
The current bull run "has support from China's grand development strategy and economic reforms," and blue chip stocks are still "undervalued", said an article published on a website run by the official People's Daily newspaper.
It said the surge in share prices was a reflection of China's growth potential and denied that prices were overheated.
"It gives psychological support to the market," said Wu Kan, head of equities trading at Shanghai-based investment firm Shanshan Finance. "Obviously, regulators hope to see a steady and healthy bull market."
During the past weekend, China unveiled a crackdown on illegal margin financing, but also announced a 100 basis-point cut in banks' required reserves, adding to investors' uncertainty over over regulators' attitude toward the red-hot market, which has surged more than 80 percent since November.
The latest People's Daily article provided markets with more confidence, China-focused investment bank NSBO wrote.
Stocks in Shanghai, home to China's blue-chip companies, are trading at 21.8 times companies' earnings. That valuation is still low compared with a price/earnings ratio of 70 at the peak of China's last bull run in October, 2007.
Shenzhen's start-up board ChiNext jumped 2.7 percent to record highs on Wednesday, trading at 94 times companies' earnings. GF Securities said in a strategy report that the crazist time for ChiNext is yet to come.
Stocks in sectors including new energy and cleantech jumped on signs that banks were stepping up financial support to manufacturers rushing to comply with tough state pollution standards.
For example, in the smoggy northern province of Hubei, 18 banks have agreed to lend more than 623 billion yuan ($100 billion) to steel mills to help them upgrade their technology to tackle pollution problems, potentially benefitting emissions controls and water treatment companies.
Nuclear power-related stocks also rose, after the China Nuclear Industry Association said on Wednesday the country will approve six to eight nuclear reactors this year. In addition, eight reactors will go into commercial operation this year, the biggest annual rise for China. (Reporting by the Shanghai Newsroom; Editing by Kim Coghill)