Beijing, Jan 5 (IANS): Chinese shares rebounded on encouraging news from the country's securities watchdog after tumbling at the opening on Tuesday.

The benchmark Shanghai Composite Index nose-dived 3.02 percent at the opening. It recovered about one percent in the morning session after the China Securities Regulatory Commission (CSRC) released an encouraging announcement, Xinhua reported.

The Hushen 300 index plunged seven percent on Monday, triggering the newly-introduced circuit breaker mechanism.

The CSRC said the circuit breaker mechanism is new to China and the market needs time to adapt, adding that China will constantly improve the mechanism.

The CSRC dismissed concerns of an upcoming massive share sell-off by major shareholders of listed companies as restrictions against selling their stocks will expire soon.

The CSRC will soon roll out new regulations on stock sales by major shareholders to restrict massive sell-offs and encourage them to reduce holdings through other means such as block trading and equity agreement transfers to reduce the impact on the stock markets.