Chinese stocks close mixed, small shares tank

Chinese stocks ended mixed after volatile trading on Thursday, with the benchmark Shanghai Composite Index up 0.58 percent, or 21.37 points, to finish at 3,682.09 points.

The Shenzhen Component Index dipped 0.35 percent, or 44.12 points, to close at 12,712.98 points.

Combined turnover on the two bourses shrank to 1.20 trillion yuan (195.5 billion U.S. dollars) from 1.26 trillion yuan the previous trading day.

Heavyweights including ship-builders and the oil industry posted handsome gains.

The ship-building sub-index surged 7.9 percent on market rumors that China Shipbuilding Industry Co., Ltd and China State Shipbuilding Corp. will merge. The two shares both rose by the daily limit of 10 percent.

PetroChina, China's largest oil and gas producer, gained 5.8 percent to 11.99 yuan per share while Sinopec, China's largest oil refiner, added 2.88 percent to 6.44 yuan.

Following rumors that authorities will crack down on stock price manipulation, many small and medium-sized market shares which have recently risen took sharp dives.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, tanked 3.91 percent, or 93.22 points, to end at 2,291.79 points.

Guangdong-based Qtone Education Co., Ltd, a company specializing in online education, fell by the daily limit of 10 percent to 273.6 yuan. Its share increased nearly 300 percent within two months.

Gao Xiang, chief financial advisor with CITIC Securities, remained bullish on the future performance of the stock market despite Thursday's volatility.

"Technically, Thursday's corrections are a result of investors choosing to sell shares and lock in profits following days of rapid gains. This will help the market in future," Gao said.