Business confidence is rising again among Chinese small and medium-sized enterprises, or SMEs, after falling for two straight quarters last year.

However, confidence still remains low, according to the latest China SME Confidence Index report released by Standard Chartered Bank on Tuesday.

The fourth quarter of 2012 recorded a reading of 47.28, a marginal increase of 0.57 percentage point from the previous quarter.

The report said: "The overall index in the fourth quarter began to stabilize and showed an upward trend, but it remained below the level of the same period in 2011," when the reading was 54.57.

Confidence in the macro economy, business operation, and investment all rose slightly from the third quarter, but confidence in financing failed to follow the upward trend of the previous term, declining by two points.

Despite a higher index reading, 32 percent of the small businesses and 36 percent of the medium-sized firms said they were not optimistic about their economic situation, while less than 20 percent said they were "optimistic".

First launched in October 2011, the quarterly index covers 1,000 SMEs, 70 percent of which are micro and small enterprises from 10 sectors in 20 cities throughout China.

Geographically, the index showed companies in the north were more confident than those in the east, south and west of the country.

"The economy started to rebound in October or November, and it usually needs three quarters to witness an overall recovery. Therefore, better readings might come out later this year," said Betty Ku, regional head of China and North East Asia at Standard Chartered Bank's SME Banking.

Wang Jun, a senior analyst at the China Center for International Economic Exchanges, said: "The figures suggested that the foundation of economic recovery this time is far from solid enough.

Related readings

SME confidence slips again in third quarter: report

Performance to determine SME funding applications

SME center boosts individual strengths

China SME Global Development Forum held in Austria