China's stocks rebounded Tuesday on speculation that European countries will adopt measures to prevent the region's debt crisis from escalating.

The benchmark Shanghai Composite Index rose 0.91 percent, or 21.87 points, to close at 2,415.05 points, after plunging to its lowest level in 14 months on Monday.

The Shenzhen Component Index climbed 1.16 percent, or 120.19 points, to finish at 10,448.66.

Combined turnover on the two bourses shrank to 105.36 billion yuan (16.49 billion U.S. dollars) from 107.25 billion yuan the previous trading day.

Gainers outnumbered losers by 685 to 204 in Shanghai and by 880 to 424 in Shenzhen.

European policymakers are expected to set up a special purpose vehicle to buy bonds of distressed countries, in order to ease the region's sovereign debt crisis.

Bank shares rallied with the entire sector rising 1.38 percent. The Ping An Insurance Co., the country's second-biggest insurance company, gained 1.83 percent to finish at 35 yuan per share, after it said its main shareholders have not cut their stakes.

The Industrial and Commercial Bank of China, China's biggest lender, added 1.27 percent to close at 4 yuan.

Coal miners and automakers also rose. Zhengzhou Coal Industry and Electric Power Co. climbed 8.64 percent to reach 10.69 yuan, while BYD, the Buffet-backed car company, jumped 9.11 percent to close at 20.95 yuan per share.