Chinese stocks rebounded on Thursday, as the central bank pledged to maintain accommodative monetary policy and boost domestic demand, while mixed inflation data showed consumer prices cooling slightly but producer prices accelerating in line with expectations.

The Shanghai Composite Index, the main gauge of Chinese stocks, closed 1.7% higher to 4,036.59. The Shenzhen Component Index jumped 3.1% to 15,398.73.

China's central bank will keep its monetary policy moderately loose and increase financial support to boost domestic demand and financial innovation.

The People's Bank of China said it will enhance counter- and cross-cyclical adjustments, leverage various monetary policy tools, coordinate monetary and fiscal policies, and promote economic stability.

On the economic front, China's annual consumer inflation decelerated to 1% in June, softer than the consensus forecast of 1.1% tracked and the 1.2% pace recorded in the previous month.

Producer inflation accelerated to 4.1%, in line with the consensus forecast of 4.1% and compared with the 3.9% pace recorded in May.

In company news, Wuhan Guide Infrared (SHE:002414) forecasted first-half attributable net profit of between 1.27 billion yuan and 1.45 billion yuan, compared with 181 million yuan the previous year. Shares of the infrared thermal imaging detectors and modules company jumped 10% Thursday.