Regulators are working on a plan of measures, including further easing restrictions on housing purchases, according to people familiar with the matter.
China recently introduced support measures for the struggling sector, which is a key driver of steel demand and considered the backbone of the national economy, but the policies were not enough to support recovery.
Analysts said lower-than-expected Chinese prices also increased hopes for further policy intervention.
September's best-selling iron ore on China's Dalian Commodity Exchange ended afternoon trading up 2.2% at 759 yuan ($106.68) a tonne. It had previously reached 770 yuan, the highest level since 20 April.
On the Singapore Exchange, July iron ore contracts increased by 1.4% to $105.35 per tonne from $108 per tonne, the highest level since April 21.
On the Shanghai Futures Exchange, rebar prices increased by 2.1%, hot rolled steel prices by 2.0%, wire rod prices by 0.8% and stainless steel prices by 0.3%.
On the Dalian Exchange, coking coal and coke prices increased by 0.3% and 1.9%, respectively.
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