Blue chips helped Chinese shares regain lost ground on Monday, despite mounting government concern about the red-hot share market that prompted an industry watchdog notice over the weekend.

In a notice released on Friday, China Securities Regulatory Commission (CSRC) urged stock exchanges, securities dealers and other authorities to educate investors about the risks of stock market investment.

These institutions must make investors understand that stock markets are risky and they should be cautious about entering the market, especially those who use all their savings or mortgage their apartments to invest in stocks, the notice said.

Analysts said the government is increasingly concerned about the formation of a speculative bubble on the domestic equity markets.

The capital markets siphoned more than 70 billion yuan (9.1 billion U.S. dollars) out of savings accounts in Shanghai in the first four months of this year, the Shanghai branch of the People's Bank of China estimated.

The stock frenzy helped decrease household deposits by 167.4 billion yuan (21.7 billion dollars) nationwide in April, according to the central bank. At the same time last year, they increased by 60.6 billion yuan (7.9 billion dollars).

Partly owing to the warning and profit taking, Chinese shares continued Friday's downward adjustment to open lower on Monday. However, investors eventually chose to ignore the alarm signal, encouraged by the National Bureau of Statistics' announcement Monday that China's consumer price index, or CPI, which rose 3.0 percent in April, had slowed down by 0.3 percentage points on the previous month.

According to analysts, investors thought the news precluded the possibility that the government would tighten interest rates to keep price hikes under control.

On Monday, major equity indices for China's two bourses closed higher, with combined turnover remaining high at 280 billion yuan (36.4 billion dollars).

The benchmark Shanghai Composite Index concluded Monday's trading at 4,046.39 points, up 24.71 points, or 0.61 percent, from the previous close on a daily transaction volume of 187 billion yuan (24.3 billion dollars).

The key stock index, which covers both yuan-denominated A-shares and foreign-currency-denominated B-shares, moved between 3,940.36 points and 4,081.43 points.

The Component Index on the Shenzhen Stock Exchange rose 242.15 points, or 2.11 percent, to end the trading day at 11,732.08 points on turnover of 93 billion yuan (12.1 billion dollars).

The Shanghai stock exchange recorded 452 gainers and 364 losers with 76 shares unchanged, while the Shenzhen bourse saw 295 gainers and 258 losers with 111 shares unchanged.

The B-share section registered no losers, with a daily rise of 9.54 percent and more than half of the stocks closing at their 10-percent daily limit.

Heavyweights took the lead in the upward trend, analysts said.

Baosteel, China's top steel producer, rose 3.75 percent to 13.28 yuan, Sinopec went up 1.42 percent to 12.84 yuan, the Industrial and Commercial Bank of China was up 0.7 percent to 5.75 yuan, and China Life, the nation's largest life insurer, up 0.2 percent to 39.3 yuan.

Galaxy Securities said bank shares were shored up by hopes for a solid A-share debut by the Bank of Communications on Tuesday.

The Minsheng Banking Corp. rose 3.36 percent to 14.44 yuan, while China Merchants Bank was up 2.36 percent to 22.16 yuan.

According to analysts with Guangfa Securities, apart from steel, financial and petrochemical shares, the real estate sector also chalked up an impressive performance. Analysts with Tiantong Securities said that, with Chinese shares consolidating their hold in 4,000-point territory, investors were likely to hang on to their positions in the next few days.

On Monday, the Hushen 300 Index, which tracks 300 companies on the Shanghai and Shenzhen stock exchanges, closed at 3,734.42 points, up 31.81 points, or 0.86 percent, from the previous close.