South African stocks closed at their highest level in nearly three months as demand for resources firms rose with hope that European Union leaders will agree on a solution to their region's debt woes later this week.

Platinum miner Lonmin was the top performer, gaining 3.8 percent to 137 rand, while bourse heavyweight BHP Billiton rose 2.5 percent to 251 rand.

European Union leaders at the weekend discussed plans for bank recapitalisation and how to leverage their rescue fund to try to stop bond market contagion, but a final decision was postponed till a second summit on Wednesday.

The sentiment is quite positive going into the discussions (on Wednesday), said Michele Santagelo, a portfolio manager at Newstrading.

Data from China showing that manufacturing in the world's fastest growing economy grew moderately in October also helped boost investor appetite, he said.

Johannesburg's Top-40 index of blue chips added 205.36 points or 0.73 percent, to 28,370.97, its highest close since late July. The broader All-Share index rose 0.65 percent to 31,654.31.

Lonmin, the world's third-largest producer of platinum, outpaced Johannesburg's platinum miner's index.

The index rose 0.13 percent on Monday but has slid over 25 percent this year, making it one of the worst performers among blue chips, as concerns over the global economy weigh on prices of the industrial metal that is also used in jewellery.

Mondi was the second-biggest gainer after being oversold last week following a rate cut by brokerage Credit Suisse. The paper maker's stock closed 2.6 percent stronger at 59.87 rand.

On the downside, property fund Growthpoint fell 1.6 percent to 18 rand after HSBC started coverage with a neutral rating.

Some 169.3 million shares were sold on Monday, according to latest stock exchange data at 1542 GMT, from 243 million in the previous session. A total of 117 stocks shed value, another 160 gained and 66 were unchanged.