The yuan <CNY=CFXS> held steady against the dollar on Friday after suspected intervention by the central bank, who said on Thursday there was no reason for it to fall further.
"Yuan devaluation suddenly became a concern for stock investors earlier this week, but now this issue is fading out of their radar," said Qi Yifeng, analyst at consultancy CEBM.
"Some bold investors are going back into the market, chasing hot concepts, but I don't think they would hold the shares for a long time."
The Shanghai Composite Index <.SSEC> gained 0.8 percent, to 3,987.57 points, bringing the week's gain to 6.5 percent, the most since early June. The CSI300 index <.CSI300> rose 0.6 percent.
The Hong Kong market was also calmer, with both the Hang Seng index <.HSI> and the Hong Kong China Enterprises Index <.HSCE> up 0.2 percent at midday.
In a sign of improving confidence in the mainland market, the outstanding margin loans - money investors borrowed from brokerages to buy stocks - increased slightly over the past week, signalling an end to weeks of rapid deleveraging.
Waigaoqiao FTZ (>> Shanghai Wai Gao Qiao Free Trade Zone) surged 10 percent, the daily upward limit, after the Shanghai government-controlled company announced a major restructuring of its assets.
Investor interest in listed state-owned companies was also rekindled by a stock ownership incentive plan announced by Chinese liquor maker Wuliangye Yibin (>> Wuliangye Yibin Co., Ltd.).
Reform expectations pushed up prices of state firms including Luoyang Glass (>> Luoyang Glass Co.,Ltd.) and Guangdong Electric Power (>> Guangdong Electric Power Development Co.).
Many Tianjin-based companies, which slumped on Thursday following explosions in the northeastern port city, rebounded. Nearly a dozen companies issued statements saying their losses were limited.
The companies included Tianjin Port Holdings Co (>> Tianjin Port Company Limited), Tianjin Economic-technological Development Area Ltd (>> Tianjin Teda Co., Ltd.) and Binghai Energy (>> Tianjin Binhai Energy & Devel. Co., Ltd).
In Hong Kong, telecommunications <.HSCIT> and Utility stocks <.HSCIU> led gains, while energy <.HSCIE> and property shares <.HSCIPC> fell.
(Editing by Richard Borsuk)
Stocks treated in this article : Tianjin Port Company Limited
, Wuliangye Yibin Co., Ltd.
, Tianjin Teda Co., Ltd.
, Tianjin Binhai Energy & Devel. Co., Ltd
, Shanghai Wai Gao Qiao Free Trade Zone
, Luoyang Glass Co.,Ltd.
, Guangdong Electric Power Development Co.