Sept. 27 (Bloomberg) -- China's stocks rose for the first day in three. Datong Coal Industry Co. paced gains among coal producers after KGI Securities Co. said prices of the fuel will hit a record this year on rising Chinese demand.

China Vanke Co. led developers lower for the second day on concern over reported government measures to curb housing price growth and property speculation.

The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, rose 17.70, or 0.3 percent, to 5,378.72 as of 10:16 a.m. local time, after dropping 0.4 percent earlier.

Datong Coal Industry Co., China's second-largest coal company by capacity, rose 0.65 yuan, or 1.7 percent, to 38.60. Shanxi Xishan Coal & Electricity Power Co., a coal miner in the north province of Shanxi, added 1.20 yuan, or 1.9 percent, to 66.

``Coal prices are likely to hit a new high in the fourth quarter,'' Steven Liao, a Taipei-based analyst at KGI, wrote in a report today. ``China's economy will maintain steady growth'' and ``coal demand is particularly strong in the fourth quarter.''

Chinese spot prices for coal used by steelmakers reached a high of 813 yuan ($108.24) per ton in August, according to Petersfield, England-based McCloskey. The price for coal used to generate power was last month just 3 yuan off its highest, reached in February, the company's data show.

Vanke, the nation's biggest listed property developer, fell 0.76 yuan, or 2.6 percent, to 29.10, extending yesterday's 5.3 percent decline. Gemdale Corp., a Chinese developer that partnered with ING Groep NV, lost 1.47 yuan, or 2.7 percent, to 52.50. The stock slid 5 percent yesterday.

The People's Bank of China may increase the interest rate on mortgages to 1.1 times its benchmark one-year lending rate, which is currently 7.29 percent, the official China Daily newspaper reported yesterday. The rate for a five-year mortgage loan may climb to 8.61 percent from 7.83 percent, it said.

To contact the reporter on this story: Zhang Shidong in Shanghai szhang5@bloomberg.net

Last Updated: September 26, 2007 22:27 EDT