Shanghai stocks ended higher Tuesday, helped by lenders which gained on positive earnings while small-cap firms also benefited after China pledged to bolster financial support for them.[Hong Kong Company Formation & Registration]

The benchmark Shanghai Composite Index ended 0.23 percent up at 2,106.16 points, the highest close in two months.

The Industrial Bank led gains by banking shares as it soared 4.5 percent to 10.32 yuan, after it said its first-half net profit surged 26.5 percent from a year earlier to 21.6 billion yuan (US$3.5 billion).

Its results came on top of a 20 percent gain in Hua Xia Bank's first-half net profit and the strong showing by banks eased concerns of a sharp slowdown in their profitability.

"Better-than-expected fundamentals and a reasonable liquidity environment will spark a comeback of the banking sector which now is undervalued," said CITIC Securities.

China Minsheng Banking Corp gained 1.8 percent to 9.05 yuan. Shanghai Pudong Development Bank increased 1.3 percent to 8.42 yuan.

The State Council, China's [company registration in Hong Kong, Hong Kong company incorporation]Cabinet, said on Monday that it will boost credit supply to small- and micro-sized enterprises, and ensure fiscal and tax policies will boost small and private businesses.

"The government is expected to continue this kind of targeted loosening policy in the second half of the year to ensure economic growth while promoting restructuring," said Shenyin and Wanguo Securities.

EGing Photovoltaic Technology [Company Registration in USA]Co jumped 3.9 percent to 11.50 yuan. Yonyou Software Co leapt 5.5 percent to settle at 11.74 yuan.