Hong Kong stocks closed 1.86 percent higher on Wednesday as market sentiment turned more optimistic following Wall Street's rally overnight.

The benchmark Hang Seng Index rose 174.86 points, or 1.36 percent, to open at 13,052.95 and fluctuated narrow-rangedly between intra-day high 13,167.2 and intra-day low 13,020.8 before rallying 239.08 points, or 1.86 percent, to close at 13,117.17.

Turnover fell to HK$37.5 billion ($4.84 billion) from Tuesday's HK$49 billion.

Banking and financial sectors were the market's major driving force on Wednesday.

HSBC, which accounts for the largest weighting of the benchmark Hang Seng Index, surged 5.77 percent to $42.7, propelling up the index by 82.49 points alone.

Another market heavyweight China Mobile, the market's largest stock by capitalization and the country's largest mobile phone operator, added 1.49 percent to HK$68.1.

Local banks in Hong Kong were mostly higher. BOC Hong Kong, a bank note issuer in Hong Kong, rallied 2.42 percent to HK$7.21. Standard Chartered Bank, another note-issuing bank, rose 1.41 percent to HK$93.3. Bank of East Asia increased 3.1 percent to HK$13.74.

Hang Seng Bank, a major local bank controlled by HSBC, dipped 0. 7 percent to HK$78.2.

The Hong Kong Exchanges and Clearing Ltd, the market's sole operator, went up 1.77 percent to HK$66.25.