Hong Kong stocks edged higher on Monday as investors looked ahead to a likely US Federal Reserve rate cut this week, while US-China talks entered a second day.

The Hang Seng Index gained 58.40 points, or 0.2%, to 26,446.56, while the Hang Seng China Enterprises Index added 19.82 points, or 0.2%, to 9,384.76.

The US central bank is widely expected to deliver its first rate cut since December 2024, trimming the benchmark by 25 basis points.

Elsewhere, Washington and Beijing are close to an agreement on TikTok, Treasury Secretary Scott Bessent said, as trade talks entered a second day in Madrid.

Meanwhile, official data released Monday showed China's economy lost steam in August, with key indicators including industrial output and retail sales falling short of expectations.

Property investment contracted further, while home prices dropped another 0.3%, extending a decline that began in early 2023.

In corporate news, Shengjing Bank (HKG:2066) closed over 21% higher after Shenyang Shengjing Financial Holding Investment Group raised its bid to take the lender private.

Shunten International (HKG:0932) also advanced 40% after Chairman Cheung Siu Fai's share purchase triggered a mandatory takeover offer.