An investor checking stock index in a localbrokerage firm, at Nantong city, Jiangsu province, Dec 31, 2014. [Xu Congjun / Asianewsphoto]

China's stocks rallied on the last trading day of the year, sending the benchmark Shanghai Composite Index to its biggest annual gain since 2009, amid speculation on further monetary easing to boost the economy.

The Shanghai index closed at 3234.68 on Wednesday, up 2.2 percent or 68.86 points. A 53 percent surge has made China the best performer globally this year while surpassing Japan as the world's second-largest equity market.

The Shenzhen Component Index ended the year at 11,014.62, up 2.7 percent or 292.36 points.

Financial shares led the gain on Wednesday, as Bank of China and Agricultural Bank soared 5 percent and Huatai Securities, Construction Bank and Communication Bank advanced more than 2 percent.

China CNR Corp and CSR Corp soared by the daily limit of 10 percent after the two biggest railway vehicle manufacturers announced their merging plan and resumed for trading.

Real estate sector rebounded on Wednesday with China Merchants' Property, COFCO Property, Poly Property and Vanke surging by the daily limit. Residential land price among the first-tier cities has increased 55.6 percent year-on-year and averaged 11,785 yuan ($1,900) per square meter by Dec 23, according to China Securities Journal.

Trading volume in the Shanghai index reached 432.3 billion yuan, and 222.8 billion yuan in Shenzhen index on Wednesday.

The amount of extended margin trading jumped to a record 691.8 billion yuan on the Shanghai Stock Exchange as of Tuesday, according to the data from the bourse, showing an increased appetite for risk as more investors take credit to finance their equity trading.

Trading volumes in the Shanghai index were 15 percent below the 30-day average for this time of day. Mainland markets will reopen on Jan. 5.

The CSI 300 Index ended the year at 3,533.71, up 2.2 percent.

The market will reopen on Jan 5.