Beijing, Sep 16 (IANS): Chinese shares rose sharply on Wednesday, after two days of decline and following gains overnight in US equities.

The benchmark Shanghai Composite Index went up 4.89 percent to end at 3,152.26 points, reported Xinhua news agency.

The Shenzhen Component Index rose 6.45 percent to close at 9,890.43 points.

Total turnover on the two bourses was 566.78 billion yuan ($88.98 billion) -- up from the 477.61 billion yuan registered on Tuesday.

China on Wednesday rebutted reports that it had recalled 1 trillion yuan of un-spent budgets from local governments, but said it is reallocating a much smaller amount of fiscal funds.

US stocks rallied over one percent on Tuesday following positive data in the US.

Following US stock gains, most Asian stock markets rose on Wednesday, ahead of an expected Federal Reserve decision on whether to raise interest rates for the first time in almost a decade.

Before the rally, Chinese shares had slumped for two days in a row after weak economic data released over the weekend.

The major Shanghai index suffered big losses after plummeting around 40 percent since hitting a June 12 peak, and it lost all its gains since the beginning of the year.