SHANGHAI: Hong Kong shares closed higher on Monday as cyclical stocks rose on hopes of a vaccine-led recovery, although Sino-U.S. tensions capped gains.

The Hang Seng index ended up 34.66 points, or 0.13pc, at 26,486.20. The Hang Seng China Enterprises index rose 1.07pc to 10,666.53.

The Hang Seng materials, industrials and energy indexes led the gains, rising 4.6pc, 2.3pc and 3.5pc, respectively.

A top official of the U.S. government's vaccine development effort said the first vaccines could be given to U.S. healthcare workers and others by mid-December.

The vaccine progress brought hopes of economic recovery, which further provided support for the market, CITIC Securities analysts noted in a report.

The brokerage recommended sectors including automakers, cement, real estate that benefit from improving domestic consumption, and banking and insurance names with low valuations.

But, investors were cautious on fresh tensions between Washington and Beijing.

The Trump administration is looking at moves that would restrict 89 Chinese aerospace and other companies from buying a range of U.S. goods and technology, according to a draft copy of the list of firms seen by Reuters.

A two-star Navy admiral overseeing U.S. military intelligence in the Asia-Pacific region made an unannounced visit to Taiwan, two sources told Reuters on Sunday, in a high-level trip that could vex China.

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.83pc, while Japan's Nikkei index closed down 0.42pc.

The yuan was quoted at 6.5694 per U.S. dollar at 0812 GMT, 0.11pc weaker than the previous close of 6.5622.

At close, China's A-shares were trading at a premium of 42.74pc over Hong Kong-listed H-shares.