An increase in the quota of the foreign investment amount in China's stock markets sent domestic shares to close slightly higher yesterday.

The Shanghai Composite Index, which covers yuan-denominated A shares and foreign-currency B shares, gained 0.77 percent to 1,095.89. The A-share Index added 0.78 percent to 1,151.96 while the B-share Index closed flat at 60.67.

The Shenzhen Composite Index, which tracks China's smaller bourse, put on 0.73 percent to 265.31.

The State Administration of Foreign Exchange late on Tuesday allowed Hongkong and Shanghai Banking Corp and Credit Suisse First Boston to invest an additional US$200 million and US$150 million respectively in the yuan-denominated stock market under the Qualified Foreign Institutional Investors program.

SAFE has approved another US$875 million in QFII quota over the past week, bringing the total to US$4.925 billion.

"The continued action did help restore some confidence, but the rebound is more technically based," said Lin Xuenong, a Huaxia Securities Co analyst. "It still takes time for overall sentiment to recover."

Shares of steelmakers gained amid bargain hunting, led by Xining Special Steel Co, which broke its 10 percent daily trading cap to 2.83 yuan (35 US cents).

Baoshan Iron & Steel Co, China's largest player, added 3.16 percent to 3.92 yuan. Fushun Special Steel Co jumped 5.66 percent to 3.36 yuan.