SHANGHAI, June 1 (Reuters) - China's key CSI300 index posted its biggest single-day rise in two and a half years, as investors sitting on growing piles of cash took advantage of last week's tumble to swoop on shares, emboldened by a chorus of official media commentary asserting the bull market is not over yet.
Investors anxious to buy stocks interpreted fresh official economic surveys as market-friendly, and were undeterred by a new wave of initial public offerings (IPOs) this week, including China National Nuclear Power Co's $2.13 billion share sale.
"The pattern in a bull market is that immediately after a plunge, money will pile in, pushing the market higher," said Wang Yu, analyst at Pacific Securities Co in Beijing.
"To many investors, the rout last week means a huge reduction in market risks, creating new buying opportunities."
The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 4.9 percent, to 5,076.18, the biggest one-day rise since December 2012. The Shanghai Composite Index gained 4.7 percent, to 4,828.74 points, its biggest rise in more than four months.
Last Thursday, both main indexes dropped more than 6 percent, and then they barely moved on Friday as investors were divided on the market's direction after the plunge.
Investors took a positive view on the official manufacturing Purchasing Managers' Index (PMI), which showed growth in China's giant factory sector edged up to a six-month high in May although export demand continued to shrink.
They also welcomed rhetoric from the central bank, which said on Friday it wants to see a "healthy" stock market, as well as front-page articles in major state-backed newspapers saying the pillars of the bull market - monetary easing and economic restructuring - remain unchanged.
That emboldened cash-rich investors.
According to data compiled by Shanghai-based fund consultancy Z-Ben Advisors, Chinese mutual funds raised roughly 300 billion yuan ($48.42 billion) last month, 15 times more than a year earlier. That made May the best month to date for the industry in terms of fundraising.
Pharmaceutical stocks surged on Monday, as investors bet some drug makers will benefit from growing concern over the Middle East Respiratory Syndrome (MERS).
Banks were also sharply firmer on a report by Bloomberg that China's Ministry of Finance may enlarge the existing local government debt swap program by 500 billion to one trillion yuan, potentially improving lenders' asset quality. (Reporting by Samuel Shen and Pete Sweeney; Editing by Richard Borsuk)