Mainland stocks edged lower on Friday after touching a fresh decade-high, while renewed AI optimism drove Hong Kong shares to a four-year peak.

The Hang Seng Index ended up 301 points, or 1.16 percent, at 26,388 for the day, near its highest since August 2021. The benchmark has added 3.8 percent for the week, the best weekly gain since March.

The Hang Seng China Enterprises Index climbed 1.13 percent to end at 9,364 while the Hang Seng Tech Index was 1.71 percent up at 5,989, up 5.3 percent for the week.

An index tracking artificial intelligence-related shares moved 1.8 percent higher.

Leading gains on the day, tech major Alibaba rallied 5.4 percent and Baidu jumped 8 percent after reports that they have started using internally designed chips to train their AI models, partly replacing those made by Nvidia.

The Shanghai Composite index ended 0.1 percent lower, after gaining as much as 0.4 percent in morning trades to 3,892, a new high since August 2015.

China's blue-chip CSI300 index lost 0.6 percent to pull back from the highest level since early 2022.

Still, the two indexes respectively made a 1.5 percent and 1.4 percent weekly gain, recovering from the sharp correction in the opening week of September.

"Investors are likely temporarily taking profits and awaiting clear signals on macro, policy and fundamentals after a solid good run since June," Morgan Stanley's China strategist Laura Wang wrote in a note.

Aiding sentiment was news that US Treasury Secretary Scott Bessent plans to meet Vice Premier He Lifeng and senior officials next week in Madrid to continue negotiations on trade, economic and national security issues.

The banking sector declined 1.5 percent, weighing on the market. The rare earth sector added 2.7 percent and the steel sector gained 1.6 percent.

Around the region, MSCI's Asia ex-Japan stock index firmed 1.2 percent as optimism on US rate cuts grew. (Reuters/Xinhua)