SHANGHAI - Chinese shares rose 0.56 percent by midday Wednesday as institutional investors chased blue-chip steel makers, dealers said.

The Shanghai Composite Index, which covers both A and B shares, was up 16.16 points at 2,908.86.

"Fund managers are buying heavyweight steel companies because of the sector's relatively cheap price and to window dress their first-half earnings results," Guotai Junan Securities analyst Zhang Xiuqi told Dow Jones Newswires.

Bengang Steel Plates surged by the 10 percent daily limit on news that China discovered an iron ore mine with estimated reserves of three billion tonnes of ore in northeast Liaoning province, where the company is located.

The Shanghai A-share index added 16.96 points, or 0.56 percent, to 3,053.78, while the Shenzhen A-share index gained 12.53 points, or 1.27 percent, to 996.50.