Chinese shares rose on Wednesday on the back of falling oil prices amid signals that mediators were making progress in efforts to end the U.S.-Iran conflict.

The Shanghai Composite Index, the main gauge of Chinese stocks, closed 1.5% higher to 3,878.43. The Shenzhen Component Index rose 1.9% to 14,144.20.

Global risk sentiment improved after oil prices declined sharply on signs that mediators were making progress in efforts to end the U.S.-Iran conflict, raising hopes for the reopening of the Strait of Hormuz.

Brent crude fell to about $79 a barrel, well below its July peak of $102. Yahoo Finance reported.

On the economic front, business activity across China's private sector expanded at a softer pace in July, with the headline RatingDog China Composite Output Index, compiled by S&P Global, coming in at 50.8. This was lower than the 53.6 recorded in the previous month.

In company news, JCHX Mining Management (SHA:603979) said its Zambian subsidiary has signed a mining contract with CNMC Africa Mining for the Chambishi copper mine's Main and West orebodies, valued at about $115 million. Shares of the mining construction company rose 7% Wednesday.