Shanghai - Hong Kong shares ended at their highest in more than three months on Thursday, after Beijing's securities regulator said it would allow cross-border stock investment between Hong Kong and Shanghai.

The Hang Seng Index ended up 1.5 percent, to hit its highest close since January 2.

The China Enterprises Index of the top Chinese listings in Hong Kong increased 0.4 percent.

Hong Kong listed mainland shares reversed morning losses in the afternoon on the news, with securities firms the biggest gainers.

Shares of the country's two-largest brokerages surged, with CITIC Securities Co Ltd gaining 9.2 percent and Haitong Securities Co Ltd climbing 7.5 percent.

The new rules would mean increased mainland investment in Hong Kong stocks, with an initial pilot limited to a 250 billion yuan ($40.32 billion) overall quota and 10.5 billion yuan daily quota.

Hong Kong will also require mainland investors to be institutions or individuals with 500,000 yuan in their accounts.

Tencent Holdings Ltd jumped 7.8 percent on the news, registering its highest one-day percentage gain since end-2011. - Reuters