China's stocks began August slightly up, putting an end to a two-day losing streak, which was helped by strong gains by coal companies.
The benchmark Shanghai Composite Index rose 0.08 percent to close at 2,703.78. The Shenzhen Component Index edged up 0.10 percent to finish at 12,002.42.
Aggregated turnover shrank to 129.28 billion yuan (20.1 billion U.S. dollars) from 155.24 billion yuan on the previous trading day.
Gainers outnumbered losers by 569 to 316 in Shanghai and by 919 to 344 in Shenzhen.
Coal producers boosted the broader market after the government on Friday said the country's power companies should increase purchases of coal and try to boost power generation to prevent electricity shortages.
Kailuan Energy Chemical jumped 5.45 percent to 17.99 yuan. Inner Mongolia Pingzhuang Energy Resources climbed 3.63 percent to 15.72 yuan.
Shares of medical equipment companies also performed well after the Ministry of Health said over the weekend at a meeting in Shaanxi that the government will ramp up investment in the sector over the next five years to 2015.
Guangdong Biolight Meditech Co. rose by the daily limit of 10 percent to 43.19 yuan. Lepu Medical Technology Co. climbed 4.87 percent to 20.45 yuan.
However, the market was restrained by concerns that the central bank may raise interest rates this month as July's inflation figure is expected to remain high.
Further, the People's Bank of China, the central bank, said in a statement Monday morning it will maintain a prudent monetary policy in the second half of this year as domestic inflation expectations remain strong and fighting inflation remains a top priority.
Bank shares dragged the market down. China Citic Bank Corp. Ltd., fell 3.20 percent to 4.54 yuan and China Everbright Bank dipped 1.53 percent to 3.21 yuan.
