SHANGHAI, Dec 29 (Reuters) - China stocks steadied on Tuesday after falling more than 2 percent in the previous session, as the central bank vowed to maintain reasonable credit growth and keep the yuan stable.
But trading volume in Shanghai shrank to a three-month low, reflecting waning activity toward the year-end.
Both the blue-chip CSI300 index and the Shanghai Composite Index rose 0.9 percent, to 3,761.87 points and 3,563.91 points, respectively.
A rebound in Shanghai-traded, dollar-denominated B shares also helped to calm frazzled nerves after they tumbled nearly 8 percent on Monday.
In an apparent move to soothe investors, China's foreign exchange regulator said on Tuesday that a new business supervision system to be launched next month won't change the way Chinese individuals use currencies and has nothing to do with capital market fluctuations.
The new system was cited by some analysts as the reason behind the B share slump.
Investors also drew comfort from a People's Bank of China statement saying it would "flexibly" use various policy tools to maintain appropriate liquidity.
Most sectors gained on Tuesday, with an index tracking banking stocks up 1 percent.
Shares of Hua Xia Bank rose 3.2 percent after Deutsche Bank agreed to sell its 20 percent stake in the Chinese lender to insurer PICC Property and Casualty Co , ending a major source of uncertainty. (Reporting by Samuel Shen and Nathaniel Taplin; Editing by Kim Coghill)