By Matthew Cowley

LONDON--Hong Kong Exchanges & Clearing Ltd. (0388.HK) and its U.K. unit, the London Metal Exchange, have signed a preliminary agreement with China Merchants Group Ltd. to explore business opportunities in Asia, the companies said Thursday.

The memorandum of understanding "demonstrates our continued commitment to expanding the LME's business and user base in Asia," HKEx's co-head of global markets, Romnesh Lamba, said in a statement.

The deal comes just a month after the LME signed a similar preliminary agreement with China Construction Bank Corp. that is also aimed at pushing into Asia.

The two groups will explore initiatives such as LME warehousing in Asia and the development of new products denominated in Chinese yuan, said Matthew Chamberlain, the LME's head of business development.

London aims to become one of the major trading hubs for the yuan, as the Chinese government seeks to make the currency more global. Earlier this year the Bank of England and People's Bank of China reached an agreement to clear and settle Chinese currency trades in London.

The groups will look to combine China Merchants Group's expertise in the logistics and warehousing sector in China with the LME strategic role in the base metals trading marketplace, the statement said.

"We see this strategic cooperation as an important step to implement China Merchants Group's strategy of integrating its industrial and financial services capability," added Wang Yan, chief executive of China Merchants Securities Co. (600999.SH).

Write to Matthew Cowley at matthew.cowley@wsj.com