The typhoon is expected to edge towards the Pearl River Estuary and to make landfall within around 100 kilometres to the west of Hong Kong in the afternoon.
On air traffic, the Airport Authority Hong Kong reported that a total of 420 flights have been cancelled as at 6.30am.
Hong Kong Observatory issued a Typhoon alert signal 10, which is the highest in Hong Kong's storm warning system.
A display board showing flights cancelled due to Typhoon Hato is pictured at the downtown airport check-in station in Hong Kong's Central district on Aug 23, 2017.
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The Japanese-administered Senkaku Islands are also claimed by China and Taiwan. The U.S.is treaty-bound to defend Japan from outside attacks.
Winds are expected to increase and the Observatory has also issued an amber rainstorm warning that signals heavy rainfall exceeding 30mm within an hour has fallen or is expected to fall.
Carrier Cathay Pacific said nearly all its flights today between 6am and 5pm local time would be axed.
Winds intensified in the morning, with the maximum sustained winds recorded at Tate's Cairn and Waglan Island at 77 and 72km/h, with maximum gusts of 103 and 86km/h, respectively.
Cathay Pacific said in a statement on its website that wind speed and direction were "severely impacting flight operations", although it added that operations remained normal last night.
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"Whilst all efforts are being made to maintain a limited Rail Service in the underground sections of the railway, travel time may be longer and Rail Service may stop at any time without notice", the MTR said.
There will be no trading in Hong Kong's financial markets on Wednesday morning if the typhoon signal remains at 8 or higher at 9am. Trading for the day will be canceled if a No. 8 or stronger signal is still in force by noon.
Government offices, schools and many private businesses are closed until the signal is off.
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