By V. Phani Kumar, MarketWatch HONG KONG (MarketWatch) -- Asian markets edged higher Friday, with Hong Kong and Seoul stocks extending gains as bargain buyers scooped up banking and property counters on hopes of a year-end rally, while Mumbai shares rose in a volatile session as trading resumed for the first time since Wednesday's deadly terrorist attack on the city. Resource stocks extended gains in Tokyo and Sydney on expectations government and central bank policy initiatives in China might help support demand for commodities. Shanghai-listed stocks lost ground, however, on concerns the Chinese central bank's steep interest rate cut earlier this weak was a sign that the economy is slowing down rapidly. Hong Kong's Hang Seng Index ended up 2.5% to 13,888.24, while South Korea's Kospi advanced 1.2% to 1,076.07, with indexes gaining for a fourth straight session. "After the four-day rally, the biggest change is that the short-term outlook now looks to be rosier on hopes of a rally to the year-end. ... There has been a release of pressure," said Benjamin Collett, head of hedge-fund sales trading at Daiwa Securities SMBC. "The short-term outlook has improved, but the long-term outlook hasn't. From an economic data point of view, the data is going to be weak, but market sentiment has improved," said Collett. After a volatile start, the Nikkei 225 Average rose 1.7% to 8,512.27 in the afternoon while the Topix index gained 0.7% to 834.82. Trading volumes were modest because of the absence of indicators from the U.S. markets, which were closed overnight for a holiday. Shares of Panasonic Corp. (PC: 14.65, 0.00, 0.0%) (JP:6752: news, chart, profile) tumbled 10.9% a day after the consumer electronics company slashed its annual net profit forecast, saying business conditions were "deteriorating sharply." China's Shanghai Composite dropped 2.4% to 1,871.16 as investors worried about the weakening economic conditions that forced the central bank to slash lending rates as well as banks' reserve requirements earlier this week. Australia's S&P/ASX 200 jumped 4.3% to 3,742.50, New Zealand's NZX 50 index climbed 1.6% to 2,710.96, Taiwan's Taiex rose 0.2% to 4,460.49 and Singapore's Straits Times Index added 0.7% to 1,722.20 by late afternoon. Mumbai stocks gain amid volatility India's Sensitive Index, or Sensex, climbed 0.9% to 9,106.35 in afternoon trading amid thin trading volumes, rebounding from its early lows. Traders said the trading activity was linked to the derivatives market, where November futures and options contracts were to expire during the session. "People are tense and concerned about what's going on around us," said Biranchi Sahu, head of institutional equity at Khandwala Securities in Mumbai. "There are also a number of absentees. Many people with offices [near the affected area in southern Mumbai] are working out of their offices located elsewhere. Almost 60% to 70% of people are working today with less than their full staff strength," he added. Leading gains in afternoon trading, shares of Infosys Technologies rose 4.4% and market heavyweight Reliance Industries advanced 1.8%. Regional detail Financial stocks broadly extended gains on bargain buying in the beaten-down sector, with Industrial Bank of Korea shares advancing 2.7% and KB Financial Group rising 0.7% in Seoul. In Hong Kong, shares of market heavyweight HSBC Holdings added 2.5%, while Standard Chartered gained 1.3%. Resource stocks performed strongly across the region, with BHP Billiton surging 7.6% and Rio Tinto soaring 8.8% in Sydney. In Tokyo, Inpex Holdings Inc. jumped 6.8% and commodity trading Marubeni Corp. rose 7.7%, while in Hong Kong, Aluminum Corp. of China gained 7.3%. In energy trading, January crude-oil futures lost $1.30 to $53.14 a barrel in electronic trading from its previous close at $54.44 on the New York Mercantile Exchange. In Asian currency trading, the U.S. dollar bought 95.25 yen, compared with 95.04 yen late Thursday.

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