China shares climb as Iran ceasefire optimism lifts risk appetite

China and Hong Kong stocks climbed on Wednesday, joining a broader regional recovery, as investors welcomed signs of potential progress in Iran ceasefire talks.

The Shanghai Composite Index .SSEC jumped 0.9% by midday break, reclaiming the key 3,900 level, while the blue-chip CSI 300 Index .CSI300 gained 1%.

Improving risk sentiment across global markets has been driven by optimism over a possible de-escalation in the Middle East conflict, which has also pushed oil prices lower and supported equities.

In Hong Kong, the benchmark Hang Seng Index .HSI gained as much as 1.3% during the morning session.

Sentiment improved after U.S. President Donald Trump said Washington was making progress in negotiating an end to the war with Iran, although the situation remains fluid as Israel's strike on Tehran on Wednesday added fresh uncertainty.

Around the region, MSCI's Asia ex-Japan stock index .MIAPJ0000PUS was firmer by 1.6%.

"I think everyone wants to believe the war could end relatively soon - though it's unclear if that is true, people are choosing to believe it for now," said Jasmine Duan, senior investment strategist at RBC Wealth Management. "At least there is a short-term risk relief."

Chinese stocks still offer certain allocation value from a longer-term perspective, with many targets from tech darlings to more traditional resource stocks to choose from, she added.

Chinese leaders pledged that the country remains a predictable anchor at a time of geopolitical flux and global uncertainty, as they addressed global corporate executives attending the country's flagship annual business conference this week.

Leading the gains, the CSI SSH Gold Equity Index .CSI931238 surged 3.4%, extending its recovery after a sharp sell-off earlier in the week.

Technology shares also rebounded as investor risk appetite improved. The CSI Semiconductor Index .CSI931865 climbed 2%, while the CSI AI Index .CSI930713 advanced 1.7%.

The CSI All Share Electric Utilities Index .CSIH30199 bounced 3.7%.

Oil-related sectors, however, plunged after Brent crude futures LCOc1 fell about 6% below $100 a barrel.

The CSI 300 Energy Index .CSI000908 slid 3%, and the CSI Oil and Gas Industry Sub Index .CSIH30198 lost 0.6%.

-Jiaxing Li/Reuters