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Nikkei closes at 6-year high after US rally; China credit fears ease

Asian equity markets cheered another record close on Wall Street overnight, led by fresh six-year highs on Japan's benchmark index.

Japanese and Chinese markets will remain open on Christmas Day while the rest of the region will be closed.

Wall Street shares powered higher on Monday after data showed consumer sentiment at a five-month high and spending up in November, pushing the Dow to its 48th record close this year. Meanwhile, gains in Apple and Facebook lifted the Nasdaq to a 13-year high.

China's cash squeeze eased after the benchmark 7-day repurchase rate opened around 5.5 percent on Tuesday, well-off the previous day's 9 percent high, after the People's Bank of China (PBOC) injected $4.7 billion through open-market operations for the first time in three weeks.

(Read more: The emerging market to watch in 2014)

Symbol
Name
Price
 
Change
%Change
NIKKEI
---
HSI
---
ASX 200
---
SHANGHAI
---
KOSPI
---
CNBC 100
---

Nikkei ends 0.1% higher

Japan's benchmark index pared gains after rising above 16,000 points for the first time since November 2007. Still, the index closed at its highest level in six years for the second time this week. According to data from Thompson Reuters, the index is set for its best annual rise since 1972.

(Read more: Santa makes early stop in Japan as Nikkei tops 16,000)

A weaker yen underpinned gains as the currency traded at 104.24 per dollar, within reach of last week's five-year peak of 104.63. Blue-chip stocks rose with KDDI 3 percent higher while Fanuc and Fast Retailing added over 1 percent each.

Mitsubishi Motors jumped 4.3 percent after lifting its operating profit forecast by 20 percent for this financial year.

Meanwhile, the government released its monthly economic report, where the word "deflation" was not used for the first time in four years as the government acknowledged rising prices

(Read more: Japan government approves record budget spending)

Shanghai up 0.1%

China's benchmark Shanghai Composite closed at a one-week high, extending gains into a second session as fears of a repeat of June's credit crunch eased. Still, the benchmark index traded 2.7 percent below it's 200-day simple moving average of 2,149.

"I think for next year, if you look at the actual fundamental valuations, the China benchmark index is on a forward P/E of around 9.5x, but also showing some growth picking up. So for that, I think you've got a good backdrop for Chinese equities going forward," said Sam Le Cornu, senior portfolio manager, Asia listed equities at Macquarie.

Commodity-related stocks were the top performers, with Baoshan Steel and Zijin Mining both over 1 percent higher.

Sydney adds 0.7%

Australia's benchmark S&P ASX 200 rose to a new one-month closing high but trading volumes were light as the stock exchange observed a holiday-shortened session.

Among the most active stocks, Lynas rallied 3.4 percent and Telstra rose 0.6 percent.

Meanwhile, the Australian dollar was steady around 89 U.S. cents, after touching a three-and-a-half year low of $0.8820 last week.

Kospi rises 0.2%

South Korean shares closed at a three-week high thanks to gains in Apple suppliers following the tech giant's near 4 percent rally overnight. LG Display climbed 1.4 percent while LG Innotek jumped 3.2 percent.

Doosan Heavy Industries and Construction rallied over 1 percent after winning a $11.5 billion order to build a thermal power plant in Vietnam.

India lower

Indian shares closed down by 0.32 percent while the rupee traded near the previous day's one-week high after central bank governor Raghuram Rajan said that he is reluctant to tighten policy further.

By CNBC.com's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC

Symbol
Price
 
Change
%Change
NIKKEI
---
ASX 200
---
DJIA
---
USD/INR
---
NASDAQ
---
AAPL
---
FB
---
6752.T
---
9983.T
---
9433.T
---
JPY/USD
---
3422
---
AUD/USD
---
SHANGHAI
---
6954.T
---

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