China’s main stock indexes rose to their highest level in two months on Friday, while Shenzhen’s Nasdaq-style ChiNext board closed at a record high, as Beijing’s local government debt swap scheme and February’s loan data boosted investor confidence.

China’s finance ministry had said late on Thursday that more than half of the high-interest local government debt falling due in 2015, totalling 1 trillion yuan ($159.80 billion), will be covered under an impending debt swap, into official municipal or provincial debt.

Analysts say the move would bolster banks’ balance sheets.

Investors were also encouraged by unexpectedly strong credit expansion in February and remarks from the central bank governor about the stock market.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 0.7 per cent to 3,617.66, while the Shanghai Composite Index gained 0.7 per cent to 3,372.91 points.

Smaller banks, many controlled by local governments, were generally up, but most big lenders surrendered early gains on profit taking.

Among the most active stocks in Shanghai were Bank of China, down 0.5 per cent at 4.16 yuan; Industrial Bank, up 3.3 per cent at 16.49 yuan and Agricultural Bank of China, unchanged at 3.32 yuan.

In Shenzhen, Ping An Bank, up 2.7 per cent to 14.99 yuan; TCL Corp, up 1.0 per cent at 5.11 yuan and BOE Technology, up 0.3 per cent at 3.14 yuan were among the most actively traded.

Total volume of A shares traded in Shanghai was 32.7 billion shares, while Shenzhen volume was 17.9 billion shares.

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