Hong Kong and mainland stocks stabilized amid expectation that more state-owned enterprises would buy back shares to boost confidence in the markets.
This came as a senior US official and other major central banks warned about further interest rate hikes.
The Hang Seng Index rose 132 points to finish 0.75 percent higher at 17,773 points, with a turnover of HK$63.5 billion for the main board.
Mainland stocks also gained with the Shanghai Composite Index adding 0.3 percent.
A number of SOEs listed in the mainland have announced plans to repurchase shares or their controlling shareholders going to increase stakes in the companies on Monday. The moves are expected to involve 7.4 billion yuan (HK$8 billion) in total.
China Petroleum and Chemical Corporation (0386), or Sinopec, repurchased 29.3 million yuan worth of shares in the A-share market on Monday, raising the amount of buybacks since September 21 to an accumulated total of 267 million yuan.
More listed firms in the mainland are expected to follow suit with a total of 31 companies listed in Shanghai making similar announcements yesterday.
In a related development, China was reported to be considering setting up a state-backed stabilization fund to shore up market confidence following the country's sovereign wealth fund purchasing 476 million yuan worth of shares in the country's largest banks last week.
Meanwhile, Chinese authorities strengthened regulations on securities lending to curb short-selling practice after banning brokers from opening new offshore trading accounts for domestic investors.
In respect of the Chinese currency, China's onshore yuan fell to a five-week low of 7.3137 against the US dollar yesterday in the midst of economic uncertainty.
US Treasury Secretary Janet Yellen warned in a Sky News interview that higher interest rates may persist and interest payment on US debts, which currently stands at 98 percent of economic output, "remains manageable."
Investors are waiting cautiously to hear what US Federal Reserve Chair Jerome Powell may say later this week.
Australia's central bank also signaled that it is prepared to tighten its policy further if it would take too long for inflation to return to target. Earlier, European Central Bank President Christine Lagarde said officials will raise interest rates again if they have to, but they're also gauging the impact of prior moves still feeding through.
Sinopec bought back 29.3 million yuan worth of shares and also took a 30 percent stake in a polyurethane company in Kazakhstan. Reuters
