SHANGHAI, Sept 5 (Reuters) - Chinese shares inched higher for the third session to fresh 20-month highs, apparently unfazed by tensions over North Korea, and bolstered by expectations economic growth will largely remain solid through year-end despite tighter policy.
Investors are also adding to positions on expectations that further reforms will be announced after a Communist Party Congress that starts in mid-October.
The meeting will feature a key leadership reshuffle and set out the government's economic plans and priorities for the next five years.
The blue-chip CSI300 index rose 0.3 percent, to 3,857.05 points, while the Shanghai Composite Index added 0.1 percent to 3,384.32 points.
Following stronger-than-expected factory activity surveys released last week, August data is expected to suggest China's momentum may hold up through the end of the year despite tighter policy.
Adding to the upbeat mood, a private business survey on Tuesday showed that China's services sector expanded at a faster clip in August as new business orders picked up.
"Economic activity in China continues to run well, so the authorities can keep their focus on deleveraging and other reforms," economists at ING wrote in a research note.
"We believe that the government is setting the scene for the Politburo, given that the economy is already in 'reform mode'. And this is already having positive impacts on the economy and markets. Apart from that, the stronger yuan continues to stem capital outflows."
More investors have climbed on board after the SSEC managed to breach and hold above a stubborn resistance level at 3,300 on Aug. 25.
Outstanding margin financing - money investors borrow to buy stocks - climbed for a fifth straight session to 948.7 billion yuan ($145.34 billion), the highest level this year.
($1 = 6.5275 Chinese yuan) (Reporting by Luoyan Liu and John Ruwitch; Editing by Jacqueline Wong)