Chinese shares rose on Thursday after reports on an anticipated pilot program of a preferred stock system in China's A-share market. The benchmark Shanghai Composite Index went up 1.07 percent, or 21.42 points, to finish at 2,019.11. The Shenzhen Component Index gained 1.42 percent, or 102.27 points, to close at 7,319.29. Combined turnover on the two bourses shrank to 173.61 billion yuan (28.46 billion U.S. dollars) from 187.1 billion yuan the previous trading day. Rules on pilot operation of a preferred stock system in the A-share market are expected to be issued soon, the China Securities Journal reported on Thursday. Many firms in sectors including banking, electricity and energy have been preparing to promote preferred stocks, which are senior to common stocks in terms of preference in dividends payment and assets. The stock market rose despite China's factory output missing market estimates. The country's industrial output expanded 8.6 percent year on year in the first two months of 2014, according to official data. The distilling sector rose the most, by 4.96 percent. Kweichow Moutai, a key alcohol maker, gained 4 percent to 164.87 yuan per share. The financial sector climbed 1.2 percent. Industrial and Commercial Bank of China Ltd., China's biggest listed lender, rose 1.24 percent to 3.24 yuan per share.