Asian Markets Rally as US Inflation Fears Ease

Asian markets ended mostly higher Thursday after investors welcomed benign U.S. consumer data which eased inflation fears. South Korea led the advanced finishing over 2 percent higher.

Data showing a smaller-than-expected 0.2 percent rise in U.S. consumer prices in April helped soothe concerns that the U.S. Federal Reserve may soon hike interest rates to curb rising prices in the world's biggest economy.

Improving earnings prospects also comforted markets. Japan's Sony surged 8.7 percent after it issued a surprisingly upbeat operating profit forecast despite the challenges posed by a slowing U.S. economy and a stronger yen.

Oil prices retreated from record levels, easing some of the inflation fears that have hit Asian stocks this month, and encouraging investors to sell their safe bond holdings to bet on riskier assets.

South Korea's KOSPI climbed 2.28 percent to hit a 5-½ month closing high fueled by record high closings by Samsung Electronics and LG Electronics on their strong earnings outlook on the year.  The index has now recouped most of the 19 percent fall which took it to its mid-March low and now stands just 0.6 percent off on the year. Today's gain is the biggest percentage gain in a single day since April 2.  

Tokyo's Nikkei 225 Average gained 0.9 percent to a four-month closing high, led higher by growing market reassurance symbolized by the surge in Sony shares.  Nippon Steel leapt after a report that Toyota Motor has agreed with it and other top Japanese steelmakers to pay more than 30 percent more for sheet steel, while bank shares -- sold recently -- powered higher after a report that no. 2 bank Mizuho Financial Group plans an effective 10-for-1 stock split.

Australian shares advanced, with Commonwealth Bank of Australia rising after reassuring comments on current trading, while Rio Tinto extended gains on talk BHP Billiton  may raise its bid. Contractor Leighton Holdings and soft drinks firm Coca-Cola Amatil also gained on upbeat outlooks, further lifting sentiment.

China's Shanghai Composite Index closed 0.6 percent lower after a late-session dip. Many Sichuan-area shares outperformed in earlier trading due in part to expectations of demand from rescue and reconstruction efforts after a devastating earthquake in the region. Chongqing Three Gorges Water Conservancy and Electric Power soared to its 10 percent limit and Chongqing Yukaifa, a property firm, also jumped after saying they had not been affected by the quake.

Singapore's Straits Times Index ended 0.4 percent higher. Shares of Neptune Orient Lines jumped over 3 percent after the shipping company posted a near-tripling in its first-quarter net profit.

Hong Kong stocks bucked the positive trend despite a strong start, reversing course to close almost flat, as cautious investors shrugged off regional gains and offloaded shares, but Hutchison Whampoa jumped 5.5 percent after a broker upgrade.

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