China's stocks rose for the third trading day in a row after the country's manufacturing sector continued to expand, suggesting that China's economy improve as a result of the massive stimulus packages.

The benchmark Shanghai Composite Index rose 1.48 percent, or 50.53 points, to finish at 3,462.59. It set its highest close since the gauge ended at 3,473.09 on May 23, 2008.

The Shenzhen Component Index gained 1.36 percent, or 186.27 points, to end at 13,856.99.

Combined turnover expanded to 358.9 billion yuan ($52.51 billion) from 336.7 billion yuan during the previous trading day.

The Purchasing Managers' Index (PMI) of China's manufacturing sector climbed to 53.3 percent in July, the China Federation of Logistics and Purchasing said Saturday. The June figure was 53.2 percent.

A reading of above 50 suggests expansion, while one below 50 indicates contraction.

It is the fifth consecutive month that China's PMI rose above 50 after the government unveiled a four-trillion-yuan stimulus package to sustain the growth of the third largest economy.

Stocks of steel makers after the China Securities Journal reported on Monday that steel mills were expected to book profits at more than 20 billion yuan in July as steel prices saw the biggest monthly gain in the recent eight years.

Baoshan Iron and Steel Co gained 4.88 percent to 10.10 yuan. Wuhan Iron and Steel Co climbed 6.50 percent to 12.28 yuan. Inner Mongolian Baotou Steel Union Co rose by the daily limit of 10 percent to 5.67 yuan.

Nonferrous metals shares remained strong as metal prices continued to rise. Prices of copper futures rose 5.26 percent in Shanghai Futures Exchange on Monday, and prices of zinc climbed 4.35 percent. Yunnan Copper Co advanced 4.70 percent to 37.18 yuan. Yunnan Chihong Zn and Ge Co rose 7.55 percent to 32.07 yuan.