SHANGHAI, June 29 (Reuters) - China stocks rose on Thursday, driven by strong gains in raw material shares as a weaker dollar lifted commodities prices.
Sentiment was also boosted by easing fears of a quarter-end liquidity crunch in the banking system, as well as a rise in the yuan, which assuaged concerns about capital outflows.
The blue-chip CSI300 index rose 0.6 percent, to 3,668.83 points, while the Shanghai Composite Index gained 0.5 percent to 3,188.06 points.
The raw material sector firmed 0.9 percent as global commodity prices rose on the back of a weaker U.S. dollar.
"The weaker dollar benefited China's commodity-related stocks in an indirect way," said Chen Yong, analyst at Lianxun Securities.
"Besides, a strengthening yuan eases capital outflow fears."
Reflecting the dollar's broad weakness, China's yuan rose against the dollar on Thursday to its highest level in 7-1/2-months.
Receding fears of capital outflows from China added to relief that China's banking system does not appear to be suffering from a cash shortage at the end of the second quarter, as some had feared.
Citing "relatively high" liquidity, China's central bank skipped open market operations for the fifth day in a row on Thursday.
Shares in China's coal miners were particularly strong, as the country said it will ban coal imports at small ports from July 1, boosting China's coking coal futures.
Shanxi Coking surged the maximum allowed 10 percent, while Shanxi Xishan Coal jumped 4.4 percent. (Reporting by Luoyan Liu and John Ruwitch; Editing by Shri Navaratnam)