China's major stock indices closed higher as the trading days of the Year of the Dog ended Friday.

The benchmark Shanghai Composite Index closed 1.30 percent higher at 2,618.23, while the Shenzhen Component Index finished 2.74 percent higher at 7,684.

Shares of over 3,300 companies listed on the two bourses closed higher.

Securities companies led Friday's rally, with shares of CSC Financial Co., Ltd. closing 4.02 percent higher.

The gains came after China's securities watchdog Thursday unveiled draft rules that will combine two existing schemes for foreign investors and expand the scope of investments.

The China Securities Regulatory Commission has begun to consult public opinion on the new rules that will combine the Qualified Foreign Institutional Investors program and the RMB Qualified Foreign Institutional Investors program, which allow overseas institutional investors to move money into China's capital account to encourage controlled flows.

Market sentiment was also boosted by the news that major progress has been made in the latest round of U.S.-China trade talks.

The ChiNext Index, China's NASDAQ-style board, rose 3.52 percent to close at 1,271.27.