[HONG KONG] Hong Kong braced for severe typhoon Hato on Wednesday, with hundreds of flights and other transport services cancelled and schools and most businesses in the financial hub expected to be closed for the better part of the day.

The weather observatory issued a signal 9, its second-highest weather warning, at 8.10 local time (0010 GMT) and said it would consider issuing a higher signal when winds strengthen.

Hato will be closest to the territory in the next few hours, skirting about 50km to the south of Hong Kong, and the observatory warned of flash floods.

Earlier, it said it expected Hato to make landfall around 100km west of Hong Kong in the afternoon. "If Hato edges even closer or intensifies, it will pose considerable threat to Hong Kong. The chance of issuing a higher signal cannot be ruled out," it said.

Streets were largely deserted as winds grew and rain lashed down, with most of the city's skyscrapers in the heart of the financial centre in darkness. The observatory issued an amber rainstorm warning, which means rainfall may exceed 30mm in an hour and said that was likely to continue.

It warned of serious flooding in low-lying areas as the city battened down for what could be one of its worst storms in years.

Winds intensified in the morning, with the maximum sustained winds recorded at Tate's Cairn and Waglan Island at 77 kph and 72 kph, with maximum gusts of 103 kph and 86 kph respectively. Maximum winds near the storm's centre were recorded at 155 kph.

Trading in Hong Kong's financial markets was delayed on Wednesday morning, the stock exchange said. Trading will be suspended for the whole day if the storm signal is still at 8 or higher at noon.

The city's flagship carrier, Cathay Pacific, said the storm would "severely" impact flight operations, with the majority of flights to and from Hong Kong between 2200 GMT Tuesday and 0900 GMT Wednesday to be cancelled.

Other transport services, including ferries to the gaming hub of Macau and outlying islands in Hong Kong, were suspended.

The observatory said rough seas with swells were expected.

Financial markets, schools, businesses and non-essential government services close when the signal 8 or above is hoisted.

Typhoon Nida in August last year was the last storm to close the stock exchange for the whole day.

REUTERS