Stocks close higher on rate cut hopes

China's stocks rose for a third day, led by developers, as inflation cooled to the weakest pace in more than two years, fanning speculation that the central bank may lower interest rates.

Gemdale Corp, a Shanghai-based developer, added 3.1 percent after inflation slowed and a newspaper said the government is seeking to aid the industry. China Cosco Holdings Co, the country's largest container line, jumped by the 10 percent daily limit for a second day after the Baltic Dry Index, a measure of shipping costs for commodities, rose for a 15th consecutive day.

The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, rose 40.45, or 1.8 percent, to 2,265.16 at the close, the highest since Sept 26. The CSI 300 Index, which tracks exchanges in Shanghai and Shenzhen, gained 1.3 percent to 2,326.75.