China shares closed in bull-market territory Thursday, after two days of sharp gains added steam to the slow recovery that has been under way since August.

The Shanghai Composite Index SHCOMP, +0.16% finished up 1.8% at 3,522.82. The gains put the benchmark up 20.3% from its close on Aug. 26, the bottom of a summer selloff. A bull market is defined as a rise of 20% from a recent low.

Thursday’s gains add to a 4% jump on Wednesday when mainland shares had rallied on speculation, fueled by out-of-date comments by the central bank, that Chinese authorities would roll out a new trading link to further open up their market to foreign investors.

The Shenzhen Composite Index 399106, +0.82% , a benchmark of the mainland’s smaller stock market, closed up 0.2% at 2,093.47. It jumped 5% on Wednesday, its largest daily percentage gain in almost two-months. Shenzhen has now rallied 32% from its recent bottom on Sept. 15.

A recovery of Chinese shares—which shed 43% from June to August—gained momentum ahead of a high-stakes meeting between Chinese President Xi Jinping and Taiwanese President Ma Ying-jeou this Saturday, the first between China and Taiwan since the two sides split in 1949 after the Chinese civil war.

“The meeting is read by investors as an indication that there will be even more economic collaboration,” said Gerry Alfonso, director of trading at Shenwan Hongyuan Securities. “This together with the business-friendly five-year plan…[is] making the investment environment rather bullish.”

Last week, leaders in Beijing wrapped up a four-day annual meeting where they pledged to spur more competition in several state-dominated industries including oil, electricity, natural gas and telecommunications, according to China’s official Xinhua News Agency. This week, Xi hinted at a range of possibilities for China’s official five-year growth target, which won’t be announced until March, saying that China could maintain its current pace this year of “about 7%,” the lowest level in a quarter-century.

In Shanghai, shares of brokerages outperformed on expectations that a rebounding market would translate into higher trading volumes. Industrial Securities Co. 601377, -1.64% , Everbright Securities Co. 601788, -1.94% and Huatai Securities Co. Ltd. 6886, -1.09% all hit their 10% maximum daily limit set by regulators.

Elsewhere in the region shares were mixed. The Nikkei Stock Average NIK, -0.05% rose 1% to 19,116.41. The Hang Seng Index HSI, +0.10% was flat.

Australia’s S&P ASX 200 XJO, +2.41% was off 0.9% and South Korea’s Kospi 180721, +0.02% slipped 0.2%.

Central banks were the main driver of the region’s gains in October, although shares have been choppy this month, as investors temper their expectations for further stimulus. The Bank of Japan and the Reserve Bank of Australia held off on introducing easing in the past week.

Overnight, Federal Reserve Chairwoman Janet Yellen said that a rate increase at the central bank’s December meeting was a “live possibility.” A move would be the first increase in rates for the U.S. since 2006 and would increase borrowing costs for companies globally.

U.S. stocks slipped overnight and the U.S. dollar gained ground against other currencies following Yellen’s remarks.

The Japanese yen USDJPY, +0.44% recouped its overnight losses and was last at ¥121.55 against the U.S. dollar, roughly flat compared with its level in late Asian trade Wednesday.

The yen fell to its weakest level since late August overnight, hitting ¥121.71 to one U.S. dollar. A weaker yen is generally positive for Japanese stocks, particularly those of exporters.

Shares in Japan extended a rally from the previous day when state-owned Japan Post Holdings Co. and its financial units jumped in an initial public offering that was the world’s largest since Alibaba Group Holding Ltd. made its debut last year.

Japan Post Holdings Co. 6178, -2.06% was up 3.4%, while its financial units Japan Post Insurance Co. 7181, -1.33% and Japan Post Bank Co. 7182, -3.35% rose 13% and 6.2% respectively.

Shares of SoftBank Group Corp. 9984, -2.59% recovered to finish up 0.5% after the company’s chairman said during an earnings presentation Wednesday that thousands of jobs would be cut at Sprint Corp. as part of a turnaround effort at the struggling U.S. wireless carrier. SoftBank bought Sprint in 2013. SoftBank also reported earnings that missed analysts’ expectations, posting a net profit of ¥213 billion ($1.76 billion) in the July-to-September quarter.

Weakness in commodity prices hit the sector in Australia, with energy shares in the S&P/ASX 200 falling 0.3%.

Brent crude oil UK:LCOZ5 was last up 0.2% at $48.66. U.S. oil prices fell 3.3% overnight, as weekly U.S. inventory data showed a sixth-straight increase in crude supplies.

Gold prices US:GCZ5 rose 0.2% to $1,108.70 a troy ounce. Prices sank to a seven-week low overnight at $1,106.20 a troy ounce on the Comex division of the New York Mercantile Exchange.