The Nikkei 225 Average climbed on a report that the British government has drafted a plan to nationalise troubled mortgage lender Northern Rock if it fails to strike a deal with private buyers. The report in the Daily Telegraph newspaper set off
short-covering across the board, with a slightly weaker yen helping to lift exporters like Honda Motor and retailers providing additional upward momentum.
South Korea's KOSPI gained 1.1 percent to a three-week closing high, buoyed by LG Electronics following positive comments on profits from Citigroup, with telecom shares gaining on hopes for further sector consolidation. LG Electronics, the world's No.5 mobile phone maker, jumped 7 percent after Citigroup singled the firm out as its top pick among Korean techs, citing better-than-expected margins and shipments for handsets.
Australian shares closed slightly lower, weighed down by losses in major banks on growing worries about the credit crisis, while U.S-focused firms fell amid concerns about the U.S. economy. But while a fall in base metals prices dented most mining firms, shares in global miner Rio Tinto were buoyed by a report it may receive a counter bid from a Chinese steelmaker.
Hong Kong stocks ended 1.6 percent higher, helped by rebounding oil issues such as Sinopec and PetroChina, but HSBC Holdings weighed as uncertainty about the outlook for a credit crisis recovery mounted.
Singapore's Straits Times Index picked up from a negative start to close 0.9 percent higher as DBS Group reversed early losses, but United Overseas Bank remained in the red.
Chinese shares made stellar gains of 2.6 percent, buoyed by continued strength in steel makers amid speculation of a possible bid for miner Rio Tinto. Investors also drew confidence from signs that index heavyweight PetroChina may be establishing a bottom after slumping as much as 38 percent since its debut.