Asian stocks ended higher Thursday, with financials trading on a firmer note, while real-estate developers were standouts in Tokyo after the Bank of Japan released details of its plan to inject liquidity into the economy.
Analysts said stocks were rebounding from oversold conditions, with direction provided by U.S. gains overnight, although volume was limited ahead of the Chinese Lunar New Year holiday.
"I think it's just a trading market, concerns over the economy will remain for some time," said Marco Mak, head of research at Tai Fook Securities in Hong Kong.
Citigroup cautioned in a research note Thursday that corporate earnings globally are in the early stages of a recession that could last four to six quarters before recovering. "We are in the midst of what will probably be the deepest global earnings recession in over 40 years," wrote Citi strategists headed by Robert Buckland.
Mitsubishi Estate was part of a broad rally in the Japanese real-estate sector after the Bank of Japan said it will accept bonds issued by real estate investment trusts, or REITs, as collateral for loans. The announcement came as the BoJ's policy board voted unanimously to keep interest rates unchanged at 0.1%. Mitsubishi Estate shares ended 5.4% higher.
South Korea's Kospi Composite ended up 1.1%, while Australia's S&P/ASX 200 added 1.3% and New Zealand's NZX-50 gained 1.1%. Hong Kong's Hang Seng Index finished 0.6% higher. Markets in Taiwan were closed for a public holiday.
Japan's Nikkei 225 ended up 1.9% after a choppy session which saw the index fall nearly 1% at one point. "(Foreign exchange) concerns will continue to limit the Nikkei's upside" with the yen solidly higher for January, said Yumi Nishimura, a market analyst at Daiwa Securities SMBC. A stronger yen makes Japanese goods less competitive on global markets.
Among Japanese exporters, Toyota Motor fell 4.2%, Nissan Motor 3.6% and Canon 1.7%, with data showing exports in the country sank 35% in December from a year earlier, the third-straight month of declines.
The BoJ's announcement that it would buy up to Y3 trillion of commercial paper and asset-backed commercial paper through the end of fiscal year in March helped spark late-afternoon support for the Nikkei.
Overall volume for Asia was low. "The overnight gain in the U.S. markets seemed to be a technical rebound, and is likely to have a limited positive impact on local stocks," said Lee Jin-woo at Mirae Asset Securities in South Korea.
The Dow Jones Industrial Average added 3.5%, recapturing roughly 85% of Tuesday's drop as a rebound in the financial sector ignited a broader rally.
Nasdaq futures lent some support in Asia, rising 1.6%. Apple added 7.8% after hours as its fiscal first-quarter net income rose 1.9% on strong iPod sales, even as it predicted second-quarter results would miss Wall Street's expectations.
EBay however dropped 5.8% in late trade as its fourth-quarter net income fell 31%. The online auctioneer issued a first-quarter view below analyst estimates.
"We remain bearish on risky assets in the near term. We think weak economic data globally and poor profit reports will continue to weigh" on sentiment, said analysts at Calyon.
Banking stocks were a bright spot in Asia. In Australia, National Australia Bank gained 2.8% and Westpac Banking 3.3%. Japan's Nomura Holdings added 4.3% while South Korea's KB Financial rose 4.2%.
In Hong Kong, HSBC added 3.6%, after falling 26% over the eight previous sessions.
Sony fell 2.6% in Tokyo as the company said it would close one of two domestic TV manufacturing plants. After trading closed, the company said it now expects a group net and operating loss for this fiscal year, and it cut its planned capital spending, citing a strong yen.
Gains in South Korean shares were limited by data showing the economy put in its worst performance in almost 11 years in the fourth quarter. Gross domestic product fell a seasonally adjusted 5.6% from the previous three months.
Kia Motors fell 2.5% even as fourth quarter net profit jumped 97% from a year earlier, helped by a weaker won. Hyundai Motor lost 2.9% with its fourth quarter net profit falling 28% from a year earlier to 243.6 billion won ($170 million), lower than KRW569.8 billion forecast in a Dow Jones Newswires poll.
LG Electronics shed 3.7% after it swung to a fourth-quarter net loss, weighed down by hefty declines in its flat-screen panel unit. The KRW671.3 billion loss at South Korea's second-largest electronics maker was worse than the market expected.
In Hong Kong, markets were higher but trade was winding down before the Chinese New Year holiday next week. "Trading interest is unlikely to be strong and investors may sell into strength if stocks shoot up after their recent sharp declines," said Conita Hung at Delta Asia Securities.
The Shanghai Composite Index added 1%, with gains in healthcare stocks after Beijing said it would spend more than $120 billion over three years on the sector. Shinva Medical Instrument added 7.7%.
Markets in China shrugged off news that the economy grew 6.8% in the fourth quarter of 2008, the lowest quarterly growth rate in seven years.
India's Sensex rose 0.4% to close at 8813.8. Bharti Airtel led the gains, picking up 6.2% after it posted a 25% rise in net profit.
Singapore's Straits Times Index ended 0.3% higher with Malaysian shares up 0.6%, stocks in the Philippines 1.3% higher and Indonesia rising 0.4%. Thai shares gained 1.6%.
In currency trade, the yen was up a bit from late New York levels, with the U.S. dollar at Y89.11, from Y89.43, and the euro at Y116.07, from Y116.55. The euro was steady against the dollar, near $1.3022.
Market speculation was rising over whether authorities in Tokyo were growing uneasy about the yen's gains. The yen gained to a seven-year high against the euro on Wednesday in New York, and a 13-and-a-half-year high against the dollar after the expiration of a large options contract.
"It is around these levels last month when Japanese officials started warning about excessive yen strength, therefore we suspect politicians to begin addressing the issue and testing the market's resolve," said CMC Markets strategist Ashraf Laidi.
Japanese government bonds gained as the BOJ outlined its plans for outright bond purchases, with lead March futures gaining and the yield on the five-year note down 0.02 percentage point at 0.675%.
February gold was at $854.2 a troy ounce, up $4.10. London Metal Exchange three-month copper gained $20 to $3,235 a metric ton from London's close, with China-based investors buying into recent weakness.
March Nymex crude-oil futures were up 10 cents at $43.65 a barrel on the Globex platform, after rising $2.71 in New York trade.
