The benchmark Shanghai Composite Index rose 42.89 points, or 1.4 percent, to close at 3,215.55. The Shenzhen Composite Index for China's smaller second exchange jumped 2.1 percent to 1,219.11.
Prices declined Wednesday after banks were ordered to set aside more reserves in a measure to control lending amid concerns about possible inflation and asset price bubbles.
"Investors realized they were overreacting and tended to think the hike is necessary for the good of Chinese economy amid inflation expectations," said Zhang Xiang, an analyst for Guodu Securities in Beijing.
Consumer goods led the recovery in anticipation of stronger sales for the traditional Chinese New Year next month.
Beijing Yanjing Brewery Co. surged 7.6 percent to 21.42 yuan, while Chinese liquor maker Lu Zhou Lao Jiao Co. soared 6.9 percent to 39.01 yuan.
Home appliance producer Hisense Electric Co. advanced 8.9 percent to 25.85 yuan, while Sichuan Changhong Electric Co., a major television set maker, climbed by 7 percent to 7.16 yuan.
Media-related shares got a boost from a government announcement that it will encourage telecom, broadcast and Internet companies to merge and cooperate in developing technologies.
Fiberhome Telecommunication Technology Co. and Guangdong China Sunshine Media Co. both soared by the 10 percent daily maximum -- Fiberhome to 32.04 yuan, and Sunshine Media to 14.41 yuan.
Airlines also rose after news reports cited a regulator saying the country's airlines made bigger-than-expected 2009 profits.
Air China Ltd. vaulted 7.2 percent to 10.62 yuan, while China Southern Airlines Corp. added 5.1 percent to 6.02 yuan.
In currency markets, the yuan weakened to 6.8270 against the U.S. dollar, down from Wednesday's close of 6.8267.
