Chinese equities rose on Monday after the government said over the weekend that it would allow greater flexibility in the yuan's exchange rate.

The benchmark Shanghai Composite Index gained 2.9 percent to close at 2,586.21.

The Shenzhen Component Index rose 3.44 percent to end at 10,309.61.

Total turnover rose to 150.77 billion yuan (22.17 billion U.S. dollars) from 145.93 billion yuan the previous trading day.

Gainers outnumbered losers by 839 to 44 in Shanghai and 928 to 44 in Shenzhen.

China's central bank said late on Saturday that it was ready to make the RMB more flexible, but it later ruled out a one-off move, saying there was no basis for any major appreciation.

As investors anticipated a reduction in dollar-based costs for aircraft and fuel, air carriers were major gainers, with Hainan Airlines jumping 9.93 percent, China Southern Airlines rising 8.18 percent and Air China up 6.44 percent.

Banks and property shares were also up as a rising Chinese currency would help boost the value of their yuan-denominated assets. Industrial Bank gained 5.69 percent and real estate firm Sunshine City Group jumped 9.97 percent.