Beijing, Nov. 16 (Reuters): Chinese capital spending in October rose at the briskest pace in over a year, rounding out a strong batch of monthly economic data and cementing expectations of a fresh rise in interest rates. Capital spending in urban areas on fixed assets such as factories and power plants increased 26.9 per cent between January and October compared with the same period last year, the National Bureau of Statistics said.

It was the fastest year-to-date pace since September 2006, eclipsing forecasts of a 26.3 per cent rise and the 26.4 per cent increase in the first nine months.

Economists calculated that investment spending in October alone was up 30.7 per cent from a year earlier. JPMorgan Chase said that was the quickest monthly clip since June 2006.

“That makes an interest rate rise more likely today. Everybody in the market is now expecting it,” Qiu Gaoqing, an analyst with Bank of Communications in Shanghai, said.

Shanghai stocks and the yuan eased on Friday as investors focused on the potential for higher interest rates.

The People’s Bank of China (PBOC), the central bank, has already raised interest rates five times so far this year and ordered banks on nine occasions to hold more of their deposits in reserve instead of lending them out.

Mingchun Sun, an economist with Lehman Brothers in Hong Kong, agreed that a rate rise was on the cards.

“We expect one 27 basis-point hike by the end of this year, and it’s possible that it could even happen today or tomorrow,” he said.