Most Asian stocks rallied Thursday, with market sentiment buoyed in large part by gains Wall Street posted overnight on optimism about a possible U.S. interest rate cut.
Hong Kong's benchmark stock index added 2 percent, Taiwan's gained 1.5 percent, and China's climbed 1.1 percent. Singapore's benchmark, meanwhile, slipped 0.4 percent. Thailand was the only Asian market to lose ground Thursday.
In Japan, the benchmark Nikkei 225 stock index added 140.99 points, or 0.9 percent, to reach 16,153.82 points on the Tokyo Stock Exchange. Wednesday, the index lost 1.7 percent.
Japanese stocks rose as investors bought blue chip electronics makers due to the yen's fall against the dollar.
Traders said, however, the market remains volatile as blue chip shares tend to be vulnerable to currency movements. Once the dollar falls below 115 yen, export-sensitive shares are hammered, they said.
Trading was light, with turnover on the exchange's first section totaling a sparse 1.523 billion shares.
Investors will likely stay on the sidelines until after the Friday release of Japanese economic data such as industrial production and the consumer price index, traders said. Investors are also awaiting U.S. Federal Reserve Chairman Ben Bernanke's speech Friday, they said.
"The market may not be stimulated by the CPI data unless the result greatly outperforms market expectations," said Hiroaki Kuramochi, head of the cash equities department at Bear Stearns in Tokyo.
Technology shares climbed on a weaker yen, which helps inflate overseas earnings and makes exports less expensive. Sony Corp. rose 1.15 percent, while Nikon Corp. added 2.31.
Oil and trading company shares also advanced, with Showa Shell Sekiyu K.K. climbing 5.64 percent and Sumitomo Corp. gaining 1.87 percent.
The broader Topix index, which includes all shares on the exchange's first section, rose 10.68 points, or 0.69 percent, to 1,568.23 points.
In Hong Kong, Wall Street's overnight gains helped boost the blue-chip Hang Seng Index, which added 463.94 points, or 2.02 percent, to 23,484.54.
But traders said the Hang Seng's outlook in the near term remains uncertain, as the index has been heavily overbought. They said profit-taking may emerge any time.
"The local market will be very volatile in the short-term. It is likely to be range-bound between 23,700 and 23,000, mainly depending on U.S. interest rate direction and capital inflow from China retail investors," said Castor Pang, a strategist at Sun Hung Kai Research Ltd.
Y.K. Chan, strategist at Phillip Capital Management (HK) Ltd. said the opening of mainland China retail investors to buy Hong Kong stocks will continue to fuel buying interest in China-related companies.
China Mobile, the biggest blue chip by market capitalization, rose 2.9 percent, boosted by the expectation of capital inflow from China investors.
Global clothing retailer Esprit was the best-performing blue chip. It soared 6.7 percent to a record close after posting a 39 percent gain in fiscal 2007 net profit.
China's offshore oil producer CNOOC rose 4 percent after it posted a better-than-expected first-half result.
The Dow Jones industrial average rose 1.9 percent Wednesday as investor grew more optimistic about the chances of an interest rate cut by the U.S. Federal Reserve and sought bargains after the big tumble Tuesday.
In the currency markets, the U.S. dollar was trading at 115.58 yen at 4:50 p.m. (0750 GMT), up from 114.88 yen late Wednesday in New York. The euro fell to US$1.3624 from US$1.3645.
BANGKOK: Thai shares lost early gains to close flat, with the benchmark SET Index dropping just 0.46 points to 791.58 amid ongoing insecurity over the U.S. subprime loan problem.
JAKARTA: Indonesia's main index rose 0.7 percent to 2,150.72 in thin volume, down from an intraday high of 2,172.291.
KUALA LUMPUR: Malaysian shares rose 0.8 percent to close at 1,273.93 in moderate volume on pre-holiday weekend profit-taking. Malaysia's markets will be closed Friday for the Independence Day holiday.
MANILA: Philippine stocks rose in heavy volume, boosted by U.S. gains and surprisingly strong economic growth in the second quarter. The 30-company Philippine Stock Exchange Index gained 3.5 percent to 3,320.34 points.
SEOUL: Technology shares led the rise in South Korean stocks. The Korea Composite Stock Price Index, or Kospi, ended up 15.51 points, or 0.9 percent, at 1841.70.
SHANGHAI: Bargain hunting helped lift Chinese stocks. The Shanghai Composite Index ended up 1.1 percent at 5,167.88. The Shenzhen Composite Index rose 2 percent to 1,439.80.
SINGAPORE: Singapore shares closed down 13.51 points, or 0.4 percent, at 3,321.15. The benchmark Straits Time index rose as much as 50.93 points in the morning, but slid back as investors held off from major buys amid lingering uncertainty in the stock market.
SYDNEY: Australia's benchmark S&P/ASX 200 index closed up 34.7 points, or 0.6 percent, at 6,135.0 on modest volume after hitting an intraday high of 6,190.7.
TAIPEI: Taiwan stocks rose, with the Weighted Price Index of the Taiwan Stock Exchange adding 123.89 points, or 1.5 percent, to close at 8,771.21 points.
WELLINGTON: New Zealand shares were boosted by bargain-hunting. The benchmark NZX-50 closed up 23.43 points, or 0.6 percent, at 4,107.60 on moderate turnover.