Stocks on the Chinese mainland rose after Deutsche Bank AG and Nomura Holdings Inc lifted their estimates for the country's economic expansion amid speculation the government will act to spur growth.

China Shipping Development Co and China Shipping Container Lines Co paced gains by trade-related companies on expectations the government will halt appreciation in the yuan to bolster exports. PetroChina Co added 0.9 percent after the National Business Daily said fuel prices may be raised this week. China Shenhua Energy Co advanced among coal producers on speculation seasonal maintenance of the country's major rail link will boost prices of the fuel.

"The market needs a catalyst such as a cut to banks' reserve ratios to extend this year's gains," said Li Jun, a strategist at Central China Securities Co in Shanghai. "If we don't see any new policies, the market will be stuck in this range."

The Shanghai Composite Index gained 20.94 points, or 0.9 percent, to 2,455.80 at the close, erasing an earlier 0.3 percent loss. The CSI 300 Index rose 1 percent to 2,681.07.

The Shanghai gauge has climbed 11 percent in 2012 following two years of losses on speculation the central bank will add to a Feb 18 cut in reserve requirements to halt a slowdown in economic growth.

Deutsche Bank boosted its forecast for China's growth this year to 8.6 percent from 8.3 percent while Nomura raised the estimate to 8.2 percent from 7.9 percent.

The broader economy is more insulated from real estate risk than expected and small businesses saw an improvement in the operating environment in past months, Jun Ma, chief economist at Deutsche Bank, wrote in a note to clients.

The central bank may cut interest rates as soon as this month because a reserve-ratio cut alone would "primarily boost loan supply not loan demand", Nomura analysts Zhang Zhiwei and Wendy Chen wrote in a note on Monday.

About 14.6 billion shares changed hands in the Shanghai Composite on Monday, or 21 percent higher than the daily average this year. Thirty-day volatility on the gauge was at 14.77 on Tuesday, the lowest level since May.

China Shipping, a unit of China's second-biggest sea-cargo group, added 1.1 percent to 6.62 yuan ($1.05). China Shipping Container, the country's second-largest carrier of sea-cargo boxes, gained 1 percent to 2.96 yuan, rebounding from a three-week low.

The yuan slumped on Monday as officials weakened the reference rate after the government reported the nation's biggest trade deficit in at least 22 years. Moderating inflation and Europe's faltering export demand may encourage the government to loosen credit and pause on currency gains, with the yuan down 0.2 percent this year against the dollar after climbing 4.5 percent in 2011.

Bloomberg News in Shanghai