By Laura He, MarketWatch

HONG KONG (MarketWatch) -- Hong Kong stocks on Wednesday jumped to the highest closing level in nearly seven months, after reports showed the manufacturing sectors in the U.S. and in China expanded last month.

The Hang Seng Index rallied 1.6%, rising the most in more than seven weeks, and logging its highest settlement since early December last year.

A survey of the Institute for Supply Management showed Tuesday that its U.S. manufacturing index registered 55.3% in June, indicating continuing expansion. Also on Tuesday, two separate reports on China's manufacturing suggested a rebound in June, with HSBC's final reading on Chinese manufacturing PMI data showing its first improvement in six months.

In Hong Kong, index heavyweight Tencent Holdings climbed 3.9%, and state-owned Bank of Communications Co. advanced 2.8%. European banking giant HSBC Holdings rose 1.8%.

In mainland China, Shanghai stocks rose for a third day in a row, with the Shanghai Composite Index up 0.4% to 2,059.42, its highest closing level in two weeks.

In other Asian markets, Japan's Nikkei Average advanced further by 0.3% to one-week high, adding to a 1.1% increase in the previous day. The broader Topix index closed up 0.4%, while the yen (USDJPY) strengthened to Yen101.421 per dollar from Yen101.555 per dollar in the prior session.

Australia's S&P/ASX 200 notched a solid 1.5% gain, and South Korea's Kospi Composite Index ended up 0.8%.

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