A Chinese investor reacts in front of a display showing prices of shares (red for price rising and green for price falling) at a stock brokerage house in Huaibei city, East China's Anhui province, June 30, 2015. [Photo / IC]

Stocks surged on Tuesday amid volatility, with the benchmark Shanghai index posting the biggest gain since 2009 after swinging 432 points.

The Shanghai Composite Index closed at 4,277.22, up 5.5 percent or 224.19 points, with the intraday swing marking its most since 1992, while the Shenzhen Component Index rallied 5.7 percent to 14,337.97. 432 points.

About 200 stocks jumped by the daily limit, led by financial, mining and medical companies.

Bank of Communications, Guotai Junan Securities, Guosen Securities and West Securities surged by the daily limit of 10 percent. Insurers including China Life Insurance, China Ping An, China Pacific and New China Life Insurance all gained more than 7 percent.

The country's largest four exchange-traded funds that track blue-chips reported a total net inflow of about 10 billion yuan on Monday, reported China Fund News, a financial newspaper owned by People's Daily, raising possibility of the purchase made by Central Huijin Investment Ltd, the shareholding entity behind the country's major State-owned financial enterprises.

The net inflow at such scale was rare, which showed "mysterious" capital had moved to buy up at the perceived market low, said the newspaper.

"Despite the recent loss, net-buy orders increased compared with that of Friday and the transaction volume have stayed at a relatively high level," said the China Securities Regulatory Commission (CSRC) in a release published on its official microblog on Monday evening, after the benchmark swung 422 points and slid 3.3 percent at the close.

The total turnover at the Shanghai and Shenzhen markets reached 1.6 trillion yuan on Tuesday.

Medical companies rebounded, with 14 stocks including Jiangzhong Pharmaceutical Co and Hualan Biological Engineering Co surging by the daily limit of 10 percent.

The fundamentals remain unchanged that reform dividends will continue to unleash under an upward economic trend, and the market liquidity is abundant, said Zhang Xiaojun, spokesman of the CSRC, adding that the commission will accelerate the opening up of Chinese capital market and encourage long-term investors, domestic and overseas.

BlackRock Inc, the world's largest asset manager, plans to start using the Shanghai-Hong Kong trade link, reported Bloomberg on Tuesday.

The firm's Hong Kong-domiciled China A-Shares Fund plans to invest part of an initial $60 million via the stock connect after a round of successful tests, said Marc Desmidt, BlackRock's head of strategic product management for Asia Pacific to Bloomberg.

The decision to use the link isn't related to the latest market decline, Desmidt said. The money manager already has about $1.5 billion of quota to buy mainland shares through separate programs for qualified foreign institutions.