SHANGHAI, Dec 30 (Reuters) - China stocks reversed initial losses to end Wednesday slightly higher, helped by a late rally in banking shares.
But activity was thin as traders awaited manufacturing activity surveys for December, which are expected to show the economy remains sluggish.
Risk appetite was also curbed by the looming expiration next month of a six-month ban on share sales that was imposed on listed companies' major shareholders during the summer market rout.
The CSI300 index of the largest-listed companies in Shanghai and Shenzhen rose 0.1 percent, to 3,765.18, while the Shanghai Composite Index gained 0.3 percent, to 3,572.88 points.
Qi Yifeng, an analyst at consultancy CEBM, identified two major sources of concern haunting Chinese investors: when will the economy bottom out, and whether the market can withstand a potential equity supply glut next year.
"Next year, there will definitely be a surge in share supply," Qi said, citing the expiration of the share sale ban and reforms that would make new listings much easier.
Also dampening investor sentiment, a Reuters poll showed that activity in China's manufacturing sector was expected to have contracted for a fifth straight month in December. The official data will be released on Friday, and a similar private survey on Monday.
In morning trading, real estate and banking shares dropped sharply as investors scaled back expectations of an imminent cut in banks' reserve requirement ratios (RRR). The central bank's chief economist, Ma Jun, wrote on Wednesday that cutting RRR too often and by too much would spur capital outflows.
Banks reversed losses in late afternoon, but an index trading property shares was still down 1.1 percent. (Reporting by Samuel Shen and Nathaniel Taplin; Editing by Jacqueline Wong)