Hong Kong shares have risen 1.03 per cent following a positive lead from Wall Street.
The benchmark Hang Seng Index gained 195.11 points to 19,176.95 on Wednesday on turnover of HK$40.65 billion ($A5.24 billion).
China's state-run Xinhua news agency reported that Beijing would expand the use of the Chinese yuan currency in Hong Kong and promote new yuan products, as part of a plan to strengthen economic ties with the southern city.
The news came ahead of Chinese President Hu Jintao's three-day visit to the territory to celebrate the 15th anniversary of Hong Kong's handover from Britain to China.
However, SHK Financial strategist Daniel So said the move "at best may lift market sentiment a little bit", adding that window-dressing ahead of the end of the first half also buoyed the market.
On Wall Street the main three indexes ended higher after the S&P Case-Shiller price index for 20 major US cities rose for the third straight month in April.
The Dow gained 0.26 per cent, the S&P 500 rose 0.48 per cent and the Nasdaq added 0.63 per cent.
In Hong Kong, China Mobile rose 1.1 per cent to HK$83.75 and CNOOC climbed 1.8 per cent to HK$14.62.
Macau casino operators recovered after Tuesday's losses. Sands China rebounded 1.8 per cent to HK$23.10 while Galaxy Entertainment rallied 3.5 per cent to HK$18.76.
Chow Tai Fook Jewellery jumped 6.4 per cent to HK$9.81 on strong earnings growth.
But Chinese shares closed down 0.23 per cent. The Shanghai Composite Index, which covers both A and B shares, slipped 5.14 points to 2,216.93 on turnover of 45.2 billion yuan ($A7.08 billion).
The benchmark index has fallen more than four per cent in the past five trading sessions due to pessimism over China's flagging economy and the debt crisis in Europe.
"Investors stayed on the sidelines as there's no fundamental change in the market. The things that have weighed on sentiment haven't been resolved," Zhang Yanbing, an analyst at Zheshang Securities, told AFP.
China's economy grew an annual 8.1 per cent in the first quarter of 2012 - its slowest pace in nearly three years. The government will release the gross domestic product figure for the second quarter on July 13.
Resources stocks led the declines. Shanxi Coal International Energy slumped 7.74 per cent to 21.33 yuan, Baotou Steel Rare-Earth dropped 3.44 per cent to 40.15 yuan and aluminium producer Chalco fell 1.88 per cent to 6.27 yuan.
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