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 U.S. dollars) 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.