Asian equities rose on Tuesday, with Shanghai and Japanese stocks closing at multi-year highs on hopes of Chinese stimulus and as investors dismissed Japan's rating downgrade.
Reuters reported late in the session that the People's Bank of China may unveil a cut in the reserve requirements for banks on the back of recent weak data. Official factory activity data earlier this week fell to an eight-month low, prompting talk of further aggressive intervention from authorities.
Meanwhile, traders seemed to dismiss Moody's downgrade of Japan's credit rating late on Monday, which pushed the yen off seven-year lows against the dollar.
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"It remains be seen if Moody's critiques have any merit. The ratings agencies have been notoriously wrong in their economic assessments of G-3. There are several reasons to be more optimistic about Japan's near-term prospects including the sharp fall in energy price and the rise in the exchange rate," Boris Schlossberg, managing director of FX strategy at BK Asset Management, said in a note.
Shanghai up 3.1%
Mainland shares closed at a fresh three-year peak, resuming their gains after snapping a seven-session winning streak on Monday.
Financial stocks were the best performers on the benchmark ; Founder Securities and China Merchants Bank shot up 10 percent each. Minsheng Banking was also 10 percent higher after announcing Anbang Insurance bought 5 percent of its shares.
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Hong Kong shares recovered over 1 percent after closing at a one-and-a-half-week low on Monday.
Nikkei 0.4% higher
Japanese stocks ended at a new seven-year high for the second straight day, reversing earlier losses as the yen weakened to 118.51 per dollar.
Exporter stocks contributed to most of the benchmark's gains; Olympus popped 2 percent while airbag maker Takata jumped 3 percent.
Fast Retailing, operator of Uniqlo stores, fell 0.4 percent ahead of releasing sales figures later in the day.
ASX 1.4% higher
Australia's benchmark S&P ASX 200 recovered after dropping to its weakest level since October 14 on Monday. The Australian dollar rose back above 85 U.S. cents following Monday's four-year low after the Reserve Bank of Australia kept interest rates unchanged at its policy review, as widely expected.
Oil stocks that suffered in recent sessions rallied sharply; Beach Energy and Woodside Petroleum climbed 3 percent each while Oil Search surged over 5 percent.
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Data showing the country's third-quarter current account deficit came in smaller-than-expected at A$12.5 billion also boosted sentiment.
Kospi flat
South Korean shares erased losses in the final hour of trade. Earlier in the session, shares hit a one-and-a-half week low after data showed November inflation slowing to a nine-month low.
Automakers capped larger gains on the benchmark Kospi, with Hyundai Motor sinking 3 percent
Nifty down 0.4%
Indian shares widened their losses after the Reserve Bank of India left interest rates on hold, as expected.