By Chao Deng 

Stocks in Australia and mainland China rose but fell in Hong Kong, after a modest improvement in Chinese manufacturing activity soothed some concerns about the country's economic growth.

Australia's S&P/ASX 200 rose 1.0% to 5415.7, while the Shanghai Composite Index rose 0.9%.

In Sydney, Commonwealth Bank of Australia and Westpac Banking both advanced 1.1%, while National Australia Bank rose 1.2%. The major iron-ore producers also gained, with BHP Billiton and Rio Tinto each gaining 0.3%, although smaller producers such as BC Iron and Atlas Iron slid, ending down 1.1% and 4.7%, respectively.

The Australian dollar continued to slide, hitting a seven-month low at US$0.8855 during Asian trade before rebounding to US$0.8912 at 0615 GMT.

Australian stocks fell before the release of the preliminary HSBC China Manufacturing Purchasing Managers Index. The gauge rose to 50.5 in September, compared with a final reading of 50.2 in August, HSBC Holdings PLC said. A reading above 50 indicates expansion from the previous month, while a reading below 50 indicates contraction.

"The Chinese release appeared to flip broader sentiment to the upside. Some of the big yield stocks, including the banks and telcos, rallied with gusto," said William Leys, a sales trader at CMC Markets in Sydney.

China is Australia's largest trading partner so worries over the pace of China's economic growth weigh on the Australian dollar and iron-ore producers.

Still, worries over China's slowing growth and weighed on markets elsewhere. The Hang Seng Index slipped 0.5% to 23837.07.

Mizuho economist Shen Jianguang said there were few signs of improvement in September's economic activity, despite the increase in HSBC's flash PMI. "Investment is still slowing and home sales continue to drop," he said, adding that weak commodity prices still pointed to sluggish demand.

Losses in Alibaba Group Holding on the e-commerce giant's second day of trading in the U.S. pressured tech stocks in Asia. In Hong Kong, Tencent Holdings fell 1.8% and software firm Kingsoft slumped 0.7%.

Markets in Tokyo were closed for a national holiday.

Robb M. Stewart contributed to this article.

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