China stocks close up 0.3 pct, banks, property rise

SHANGHAI May 12 (Reuters) - China's key stock index closed up 0.3 percent on Wednesday, bouncing from a fresh one-year low as banks and property companies managed a technical rebound although renewed policy tightening concerns and worries over Europe's debt crisis weighed on sentiment.

The Shanghai Composite Index .SSEC ended the day at 2,655.7 after twice dipping near the key psychological level at 2,600 points.

"Any upward movements we get are due to the market being very oversold. Negative factors persist but after the sharp drops over the last two days the A shares needed to come up for air," said Chen Huiqin, analyst at Huatai Securities.

Chen said the index was unlikely to climb very far above 2,600 points this week due to weak investor sentiment.

Turnover in Shanghai A shares fell to 90 billion yuan ($13.18 billion) from Tuesday's 101 billion yuan.

Shanghai's property subindex .SSEP outperformed the wider market, up 2.0 percent despite a news report that Shanghai was preparing tough new draft measures to rein in the property market that would include tax steps. [ID:nTOE64A0B1]

Losing Shanghai stocks outnumbered winners 601 to 283 with a strong performance from banking stocks, which were among the most active.

ICBC (601398.SS), the day's most active stock, rose 2.9 percent, while Minsheng Bank (600016.SS), the second most active, and Merchants Bank (600036.SS) each gained 2.4 percent.

The Shanghai's composite's 14-day relative strength index rose to 22 from 19 earlier in the day, remaining far below the 30 level that indicates a market has become oversold. (Reporting by Farah Master; Editing by Edmund Klamann)