Chinese equities posted large gains on the last trading day of 2010, with the benchmark Shanghai Composite Index up 1.76 percent, or 48.5 points, to close at 2,808.08 points on Friday.

The Shenzhen Component Index jumped 2.63 percent, or 319.66 points, to close at 12,458.55 points.

Combined turnover expanded to 200.53 billion yuan (30.85 billion U.S. dollars), from 161.89 billion yuan on the previous trading day.

Gainers outnumbered losers by 861 to 32 on the Shanghai bourse and by 1,087 to 45 in Shenzhen.

Despite the Friday gain, China's stock market was still one of the world's worst performing markets this year, with equities declining 14.31 percent in the Shanghai market from the end of 2009 due to the government's liquidity control and property market tightening.

Non-ferrous metals led the rise as shares of rare earth stocks continued to surge on speculation that rare earth prices would climb after the government slashed export quotas for the precious metals for 2011.

China Nonferrous Metal Industry's Foreign Engineering and Construction Co. and Taiyuan Twin Tower Aluminum Oxide Co. rose by the daily limit of 10 percent to 31.54 yuan and 18.12 yuan, respectively.

Copper producers also posted widespread gains due to weakening dollars and rising copper futures prices, with Jiangxi Copper Co., China's biggest producer of the metal, up 7.57 percent to 45.17 yuan.

Yunnan Copper Co. surged by the daily limit of 10 percent to end at 27.5 yuan.

Analysts said they expect a rebound in the A-share market next year as banks tend to extend more loans at the beginning of the year, and that December year-on-year CPI is likely to fall from the 28-month high in November.

Also the country's economic growth had largely outpaced the stock market's performance this year which gave room for market to rise next year, said Guangzhou-based Wanlong Stock Consulting company in a note.

China's economy grew 9.6 percent year on year in the third quarter this year, slowing from the 10.3-percent increase in the second quarter and 11.9-percent surge in the first quarter.