Typhoon Hato, a maximum category 10 storm, slammed into Hong Kong on Wednesday lashing the Asian financial hub with destructive winds and waves which uprooted trees, flooded streets and forced most businesses to close.

More than 400 flights were cancelled, financial markets suspended and schools closed as Hato bore down on the city, the first category 10 storm to hit Hong Kong since typhoon Vicente in 2012.

Many skyscrapers in the heart of the financial centre were empty and in darkness as the city's workers stayed at home and hunkered through the storm.

Hato churned up Hong Kong's iconic Victoria Harbour and triggered large swells and massive waves on some of the city's most popular beaches, with serious flooding in low-lying areas.

In residential districts like Heng Fa Chuen on densely populated Hong Kong island, massive waves smashed against the sides of oceanfront buildings and surged over a promenade, swamping vehicles parked nearby.

Construction cranes swayed precipitously from the tops of skyscrapers, trees toppled and residents deployed canoes to get around on some streets.

"I've never seen one like this," said Garrett Quigley, a longtime resident of Lantau island to the west of the city.

"Cars are half submerged and roads are impassable with flooding and huge trees down. It's crazy."

Maximum winds near Hato's centre were recorded at a destructive 155 kmh (95 mph).

A senior scientific officer for the Hong Kong observatory said sea levels could rise up to five metres (15 feet) in some places, with the government issuing flood alerts and opening 27 temporary shelters across the city.

Winds intensified in the morning, with the maximum sustained winds recorded at Tate's Cairn and Waglan Island at 77 kmh (48 mph) and 72 kmh (48 mph), with maximum gusts of 103 kmh (64 mph) and 86 kmh (53 mph) respectively.

Trading in Hong Kong's financial markets was halted for the day, the stock exchange said. Typhoon Nida in August last year was the last storm to close the exchange for the whole day.

A total of 420 airline flights to and from Hong Kong had been cancelled, said the government.

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.

Hong Kong Airlines also suspended most of its flights on Wednesday up until 0900 GMT.

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