Shares in Shanghai and Hong Kong were higher by midday on Monday, starting the month on a strong note, with commodities issues sharply higher after forecast-beating manufacturing data.
The Shanghai Composite Index ended the morning up 1.9% at 3,035.54, after posting its biggest monthly gain since July 2009 last Friday.
China's official purchasing managers index (PMI) blew past expectations to rise to a six-month high of 54.7 in October from 53.8 in September.
The data gave further strength to a rally spurred by strong corporate earnings and prospects of robust foreign inflows.
Speculation that the Federal Reserve would further ease policy gave a large boost to investor sentiment, as the market has been closely watching the likelihood of increased foreign inflows entering China's domestic market.
"We are still tracking foreign developments. If the U.S. dollar continues to weaken, then Shanghai's A-share market will rise," said Zheng Weigang, senior trader at Shanghai Securities. "This is a main focus."
Commodity and energy issues gained, with China Shenhua Energy Co Ltd up 3.4% after posting a 12% rise in profit on strong demand from its home market.
In Hong Kong, China Shenhua rose 3.5%.
Datong Coal Industry7 Co gained 6.2%, while Zijing Mining Group jumped 4.6%.
China Baoshan Iron & Steel, the country's biggest listed steelmaker, gained 1.5% after a company executive said steel demand would be steady next year.
Inner Mongolia Baotou Steel Union Co jumped by its 10% limit.
Local media reported that China's nearly 2,000 listed companies posted a combined 1.2 trln yuan ($180 bln) in net profit in the first nine months of this year, up 35% from the same period last year.
Turnover rose to 136 bln yuan ($20.38 bln) from 105 bln yuan by midday on Friday.
FINANCIALS, COMMODITIES UP IN HONG KONG
The Hang Seng Index was up 1.94% at 23,543.60 at the midday trading break, reversing a 1.8% drop last week, the worst weekly performance in two months.
Trade volume fell to HK$55 bln ($7.1 bln) from HK$86 bln at midday on Friday.
"A lot of investors still have plenty of cash and are putting their money into these markets," said Howard Gorges, vice-chairman at South China Financial Holdings. "The market expects the Fed to continue its quantitative easing, but even if they don't, the expectation is that the Fed is ready to act if necessary. It's a done deal that they can, and you could argue that if they don't do much they feel the situation is not so bad."
After a slump last week as profits failed to meet expectations, Chinese insurers Ping An Insurance (Group) of China was up 3.1% and China Life Insurance Co gained 2.7%.
Commodity counters rose on optimism of continued demand for materials after a strong manufacturing data in China.
Gold miner Zijin Mining Group gained 4.4%, while Jiangxi Copper Co was up 5.6%. Anhui Conch Cement Co was up 3.4% and Yanzhou Coal Mining Co added 4.9%. China Construction Bank Corp gained 2.7%. China's largest mortgage lender posted a record quarterly profit on Friday, boding well for its plan to raise up to $11 bln through a share sale.
Bigger rivals that also reported strong results last week were higher, with Bank of China up 2.2%.
