SHANGHAI: China's blue chip shares ended sharply higher on Wednesday after state media said a selling ban on major shareholders brought in to help arrest a market crash last summer would remain in place until the government publishes new rules on such disposals.

The ban was set to expire at the beginning of next week, but after markets crashed 7 percent on Monday, the China Securities Regulatory Commission (CSRC) said it would implement a new policy to manage the pace of stakeholder sales, without specifying when the new policy would be ready.

The CSI300 index rose 1.75 percent to 3539.81, while the Shanghai Composite Index gained 2.3 percent to 3,362.29 points.

China CSI300 stock index futures for January were up 2 percent at 3,465, still about 75 points below the underlying index, indicating expectations of weakness to come.

Shen Weizheng, fund manager at Shanghai-based Ivy Capital, said extending share sale restrictions would prolong market bearishness.

"It's like the sword of Damocles, always hanging over your head. The best way is to remove restrictions altogether."

The indexes were up despite data released in the morning showing that growth in China's services sector slowed to its weakest in 17 months in December, which came two days after figures showing factory activity shrank for a 10th straight month.

The slowing economy contributed to weakness throughout 2015 in China's currency, which was weaker again on Wednesday after the People's Bank of China unexpectedly fixed the midpoint rate at 6.5314 per dollar prior to the market open, even weaker than the previous day's closing quote 6.5157.

"The midpoint was a surprise. Still, it stayed in line with the PBOC's tone of late to lead the yuan to edge down," said a dealer at an Asian bank in Shanghai.

That triggered further selling in the offshore yuan, which slumped to 6.7250 per dollar, its lowest since trading began in 2010 and a record discount of about 2.5 percent to the onshore rate of 6.5526, adding to a spread that is encouraging capital to flow out of the country.

The yuan's weakness, renewed Chinese stock market volatility and a slowing economy have put China's policymaking at the forefront of global market risks at the start of 2016, along with the pace of expected US interest rate rises.

Zhou Hao, Commerzbank's senior Emerging Markets Economist for Asia, said the sudden movement in the fixing rate would create more market volatility and suggested Chinese authorities were willing to tolerate more weakness in the currency for the time being.

China's trade partners - and regional competitors for offshore export markets - will be wary of the economic impact of a sliding yuan.

China's struggling exporters might benefit from a softer currency, but it would also increase the cost of servicing offshore debt incurred by Chinese companies and make overseas investments more expensive for domestic firms. It would also further damage corporate interest in using the yuan for trade and investment - another policy goal.