SHANGHAI'S key stock index rose slightly in the morning as investors stayed upbeat about the upcoming European Union leaders' summit and China's consumer price index release.

The Shanghai Composite Index edged up 0.1 percent to end at 2,328.14 points by the noon break after two straight daily losses. Turnover stood at 20.5 billion yuan (US$ 3.22 billion).

Investors expected European leaders to make substantial progress in forming a closer fiscal union at the summit later this week to avoid an escalating and contagious debt crisis after Standard & Poor's warned of credit downgrades across the region on Monday.

Meanwhile, China's CPI for November, due on Friday, added to the market upside as the figure is anticipated to drop under 5 percent to the lowest level this year.

Financials led the advance in the morning session on speculation that the eased EU debt crisis and the curbed inflation may take pressure off liquidity, which is constrained by relatively tight monetary policies.

The Agricultural Bank of China gained 0.78 percent to 2.58 yuan. China Merchants Bank rose 1.02 percent to 11.88 yuan. Ping An Insurance Group jumped 1.63 percent to 37.42 yuan.