ASIA MARKETS: Asia Stocks Gain, With Japan Surging

By Sarah Turner, MarketWatch

SYDNEY (MarketWatch) -- Asia stocks gained Wednesday, with Hong Kong and Australian markets hovering around multi-year highs, while Japanese shares surged as earnings results and helped fuel gains.

The region's second-largest equity market, Japan's Nikkei Stock Average , surged 2.3%, while regional leader, Hong Kong's Hang Seng Index , climbed 0.7% after hitting an intraday level not seen since May 2011 early in the session.

The Shanghai Composite Index inched up 0.1%, South Korea's Kospi rose 0.4%, and Australia's S&P/ASX 200 index closed 0.2% up to extend a 21-month high and seal its 10th straight gain.

"Markets are testing higher," said Andrew Sullivan, director of sales trading at Kim Eng Securities.

"Generally, market sentiment is that the economic backdrop is better than this time last year," he said, though adding that some economic overhangs remain.

Sullivan also said there has been more volume in stock markets lately, and "it seems like extra money is going to equities" rather than bonds.

In Hong Kong, companies exposed to the global economy were pulling higher, as ports operator China Merchants Holdings International Co. (0144.HK) gained 2.1%, and Cosco Pacific Ltd. (>> COSCO PAC ADR) rose 1.7%, while footwear major Belle International Holdings Ltd. (>> BELLE INT ADR) advanced 2.2%.

Some major Japanese retailers jumped after retail-sales data for December rose 0.4% from a year earlier, just ahead of analyst expectations for a 0.3% increase.

Among them, Fast Retailing Co. (>> FAST RETA ADR) surged 3.9%, while Takashimaya Co. (>> Takashimaya Company, Limited) gained 2.4%.

Meanwhile, earnings optimism gave the Japanese market an extra boost on Wednesday, as Yahoo Japan Corp. (>> Yahoo Japan Corporation) surged 17.1% after updating its fiscal-year earnings forecast to a 10%-11% gain year-on-year amid growing online-advertising revenue, and announcing that it would buy back shares.

Telecoms also saw earnings-related buying in Tokyo, with Softbank Corp. (>> Softbank Corp) improving by 3.6% after the Nikkei reported that the wireless carrier is expected to post a 10% gain for its April-December operating profit, helped by sales of Apple Inc.'s (>> Apple Inc.) iPhone.

Rival KDDI Corp. (>> KDDI Corp) -- which also sells the iPhone, and which already posted a 40% rise in its October-December operating profit late Monday -- saw its shares advance another 3.1% on Wednesday.

Also among the wireless carriers, NTT DoCoMo Inc. (>> NTT Docomo Inc) traded up 1%, even as a separate Nikkei report tipped a 9% lower nine-month operating profit for the firm.

Central Japan Railway Co. jumped 6.6% after reporting a 49% rise in nine-month net profit, while fellow rail operator Keisei Electric Railway Co. rose 1.9%.

In South Korean trading, Samsung Electronics Inc. (>> Samsung Electronics Co., Ltd.) climbed 2.1%, while rival chip maker SK Hynix Inc. (>> HYNIX SEMI GDS) rose 1% after reporting a swing to quarterly profit, thanks to rising chip demand after the release of new smartphones and other devices.

Australia saw major mineral extractors advance, with Rio Tinto Ltd. (>> Rio Tinto plc) up 1.5%, and BHP Billiton Ltd. (>> Rio Tinto plc) higher by 1.2%.

The move in the mining sector offset losses for consumer-staples firms, including Coles supermarket owner Wesfarmers Ltd. [(>> WESFARMER ADR), which traded down 1.8% after reporting second-quarter sales figures.

Australia's Prime Minister Julia Gillard on Wednesday surprised the country by announcing that the next general election will be held on Sept. 14.

"This is a very early announcement for an election date. At face value, this might inject some uncertainty into the economy, yet it should be remembered that Parliament has been hung for over two years now, and political uncertainty has been high for the duration," said Michael Turner, strategist at RBC Capital Markets.

U.S. monetary policy will be front and center for investors later Wednesday, with the Federal Reserve due to wrap up a two-day policy meeting. Investors will be alert for any signals as to the duration of the Fed's bond-buying program.

With Spanish and U.S. gross domestic product figures also due out, "data releases ahead of the Fed [Federal Open Market Committee] rate decision today will keep markets busy," Crédit Agricole strategist Mitul Kotecha said.

U.S. stock gains Tuesday had set up a mostly positive lead for Asia, with pharmaceutical giant Pfizer Inc. (>> Pfizer Inc.) leading blue-chip gains after reporting fourth-quarter earnings that beat estimates.

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