Chinese stocks rally after rate cut

An investor smiles in front of a screen displaying stock indices and prices of shares at a securities brokerage in Fuyang, East China's Anhui province, Nov 24, 2014. [Photo/IC]

Chinese stocks rallied to a three-year high on Monday after the nation's central bank unexpectedly cut interest rates during the weekend to boost the economy.

The benchmark Shanghai Composite Index closed at 2,532.88 points, up 1.85 percent or 46.09 points, while Shenzhen Component Index rose 2.95 percent to 8,577.91 points.

China cut the benchmark interest rates for the first time in more than two years as policy makers stepped up supports for the world's second-largest economy.

The one-year lending rate was reduced by 40 basis points to 5.6 percent, while the one-year deposit rate was lowered by 25 basis points to 2.75 percent, the People's Bank of China said on Friday.

Brokerage, real estate and Internet-themed stocks led the gains. GF Securities, Merchants Securities, Poly Real Estate, Merchants Property Development, Hundsun Technologies and Sinodata soared by the daily limit of 10 percent on Monday.

Insurance sector remain bullish, as New China Life Insurance rose 8.65 percent to 34.41 yuan and China Life closed at 18.61 yuan, up 8.07 percent.