Mainland and Hong Kong stocks rose for a third straight session on Wednesday, with the Shanghai benchmark posting its highest close in nearly four years, as prospects of a Federal Reserve interest rate cut next month lifted investor sentiment.

The benchmark Hang Seng Index added 643 points, or 2.58 percent, to end trading for the day at 25,613.

The Hang Seng China Enterprises Index ticked up 2.62 percent to end at 9,150 while the Hang Seng Tech Index climbed 3.52 percent to close at 5,630.

Mainland stocks closed higher, with the benchmark Shanghai Composite Index up 0.48 percent at 3,683 and the Shenzhen Component Index 1.76 percent higher at 11,551.

The combined turnover for these two indexes was 2.15 trillion yuan, up from 1.88 trillion yuan on Tuesday.

Shares related to glass and non-ferrous metals led gains while stocks related to petroleum and breweries suffered major losses.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, gained 3.62 percent to close at 2,496.

Expectations have firmed for a Fed rate cut in September after the US consumer inflation report indicated the pass-through from President Donald Trump's sweeping tariffs to goods prices has so far been limited.

With rising expectations of a Fed rate cut, risk appetite improved and "emerging and developed equity markets resonated," analysts at Guoyuan Securities said in a note.

Lifting market sentiment further, China said it would offer interest subsidies for businesses in eight consumer service sectors to support services consumption amid a slowing economy.

"China retains the fiscal firepower to stimulate growth and absorb slack from reduced exports should tariffs from the US be punitive," said Vivek Bhutoria, portfolio manager for global emerging market equities at Federated Hermes.

"We believe the market has been over-discounting risks in relation to Chinese equities, and even if Trump levies punitive tariffs this week, China has the ability to grow its way to prosperity and, as such, we are still positive on China." (Reuters/Xinhua)