SHANGHAI, April 11 (Reuters) - China stocks reversed earlier losses to end higher on Tuesday, led by the Shanghai benchmark index closing at a 15-month high. Strong gains in stocks related to the Xiong'an New Area underpinned the market, even as investors continued to retreat from smaller-caps over regulatory concerns.
The blue-chip CSI300 index rose 0.3 percent to 3,517.33 points, while the Shanghai Composite Index added 0.6 percent to 3,288.97 points.
Stocks and sectors expected to benefit from the country's newly-launched Xiong'an New Area continued to grab attention, with shares in around 30 listed companies rocketing 61 percent in just five sessions.
Beijing on Saturday announced plans to build Xiongan New Area, modelled on the Shenzhen special economic zone next to Hong Kong that helped kickstart China's economic reforms in 1980.
"The Xiong'an New area could prove to be a big investment theme within the year," said Zhang Gang, an analyst with China Central Securities.
He added investors should avoid smaller-caps, in particular those companies that award bonus shares instead of cash dividends, echoing China's top securities regulator who vowed to punish stingy "iron roosters" which gave investors no cash return.
Banks continued to drag on the market after the country's banking regulator said it had issued guidelines on risk control for lenders as authorities increased their efforts to contain risks from a rapid build-up in debt.
Sectors were mixed. Gains were led by real estate stocks.
An index tracking major developers rose 2.2 pct to close at a 4-month high, posting its fifth straight session of gains, with developers operating in Beijing-Tianjin-Hebei area expected to benefit handsomely from the development of Xiong'an New Area. (Reporting by Luoyan Liu and John Ruwitch; Editing by Eric Meijer)