The Australian stocks have risen to its highest level in three weeks after Rio Tinto said it has positive outlook on China.

The ASX 200 increased 30 points to 4,478 after Rio Tinto's upbeat outlook on China. Rio Tinto has said that it is cautiously optimistic about an increase in growth for China, which is its largest customer in the global market. Chief executive Tom Albanese cited stronger than expected economic data from China I recent months to say that the company expects strong growth in the country. Rio Tinto has said that it is aiming to reduce more than $5 billion in costs in the coming two years.

Australian business spending data indicated that it is expecting planned mining investment to fall for the year till June 2013. As a result, the Reserve Bank of Australia is expected to reduce its interest rates again next week. The lower Australian capital expenditure data might convince the RBA to reduce its interest rates further.

Rio rose 0.9 per cent after it said that it expects growth in demand from China as the country's economy records strong recovery.