Property developers led the way on Tuesday as Shanghai shares posted modest gains for a second straight day.
Of the 70 property companies listed in the city, 56 reported gains, with Poly Real Estate Group Co jumping by the 10 percent daily limit to 10.56 yuan ($1.65).
The Shanghai Composite Index closed up 0.3 percent at 3,456.31 points, after falling 0.8 percent during the morning session.
"Property companies are meaningful contributors to the economy, and they are likely to benefit again next year as the government seeks to stimulate domestic demand," said Jing Ning, portfolio manager at Fidelity International.
The decision by the International Monetary Fund to include the yuan in the Special Drawing Rights basket of currencies — announced late on Monday — had little impact on the markets.
The decision had been expected for a long time, said Samuel Chien, a partner at hedge fund house Shanghai Boom Trend Investment Management Co.
"Theoretically, the move will make yuan assets more attractive to investors, but there's also a high expectation of a further yuan depreciation as China needs a weaker currency to support its struggling manufacturing sector," he said.