Stock markets on the Chinese mainland ended Friday on an upswing, but the day's gains weren't enough to erase the devastating losses which sent equities plunging earlier in the week.
The Shanghai Composite Index finished trading at 1,979.21 Friday, up 29.19 points, or 1.50 percent; while the Shenzhen Component Index closed at 7,694.47 after edging up 150.14 points, or 1.99 percent.
Compared with the previous Friday, the Shanghai Composite and the Shenzhen Component ended down 4.53 percent and 5.43 percent week-on-week respectively thanks largely to anxieties centering on parched liquidity conditions in the interbank market.
Strong performances from several of the market's most heavily weighted sectors - including real estate and finance - kept both indices on a mostly upward track Friday. Chinese property developer China Vanke Co surged 8.36 percent to 9.85 yuan ($1.60) on the day. China Merchants Property Development Co edged up 6.82 percent to 24.28 yuan. Bank stocks were pulled along as well. Shanghai Pudong Development Bank Co went up 5.08 percent to 8.28 yuan.
Contractions in medical treatment and satellite navigation equities kept the day's advances in check as sentiment moderated.
Combined turnover at the two exchanges slid to 160.7 billion yuan, down from Thursday's 188.8 billion yuan.
Investor confidence got a boost after Zhou Xiaochuan, the governor of the People's Bank of China (PBC), reportedly said Friday at the Lujiazui Forum 2013 that the central bank would help financial institutions maintain reasonable lending levels to support the real economy.
These remarks came just days after the PBC's refusal to inject cash into the money market sparked a panic which sent mainland equity benchmarks reeling. The central bank announced late Tuesday that it had provided certain financial institutions with cash to ease the funding squeeze.
Despite improvements toward the end of the week, analysts warn that market conditions are still fragile and the situation could change dramatically depending on government policy action.
"The worst of the liquidity squeeze, especially the confusion and panic among many market participants, is perhaps over. However, an improvement in market sentiment and drop in interbank rates do not mean a reversal of macro and monetary policies," according to a report by Reuters Thursday, citing a report written by UBS economists.
Mainland stock markets registered a net capital outflow of 32.93 billion yuan last week, with the banking, securities and transportation sectors experiencing the largest drains. No sectors recorded inflows.