The rally in iron ore prices has extended to seven days, pushing the commodity above $US65 a tonne for the first time in four months.

At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US65.10 a tonne, up 1.9 per cent from its prior close of $US63.90 a tonne.

The recent rally has driven the commodity to its highest mark since early February and almost 40 per cent above the 10-year low of $US46.70 a tonne it slumped to in early April.

Driving the gains have been falling stockpiles at Chinese ports and hopes of fresh stimulus from Beijing.

The latest sign of action from Beijing came as it granted another 1 trillion yuan ($230 billion) quota to local governments to exchange high-interest debt for low-cost, long-maturity bonds to reduce balance sheet pressure on provinces.

The move came as the People’s Bank of China downgraded its full-year growth forecast to 7 per cent, from 7.1 per cent, citing rising headwinds for the world’s second largest economy. The central bank’s call caused speculation of further stimulus from Beijing to swell.

A rising ore price has not been enough for Fitch Ratings to improve its view on the sector, however, with the ratings agency downgrading its outlook for Rio Tinto and BHP Billiton from ‘stable’ to ‘negative’.

The decision was tied to a downward revision in its price forecasts for several key commodities, including iron ore. However, the credit ratings of the two mining giants were left unchanged.