Asian markets ended mixed Wednesday, with Japan closing 1.6 percent higher, boosted by a recovery in financials and a stronger U.S. dollar. But Hong Kong and China stayed in the red, weighed down by Chinese telcos.
The dollar surged on Tuesday after Federal Reserve Chairman Ben Bernanke warned the weak U.S. currency posed a risk to inflation, sparking speculation the central bank could raise interest rates later this year.
A retreat in oil prices pressured energy plays such as Japan's Inpex Holdings and South Korea's SK Energy, but lifted the region's major airlines, with Qantas ending 4.7 percent higher.
Tokyo's Nikkei 225 Average rose 1.6 percent, powered by Honda Motor on its strong U.S. sales and by Fast Retailing, which shot to its greatest one-day gain in more than four years. Sony and other exporters gained on a slightly stronger dollar, while steady oil prices gave the market a bit of room to rise.
South Korea's KOSPI closed 0.7 percent higher with retreating oil prices lifting transport firms such as Asiana Airlines and steelmakers such as POSCO also posting gains.
Australian shares closed just slightly higher, buoyed by a recovery in financial shares such as Macquarie Group, though falls in oil and gold prices pressured resource firms such as Woodside Petroleum. Gaming group Crown fell after it said it would scrap a $5 billion Las Vegas casino project due to tight credit markets. Crown said it would write off its A$44 million (US$42 million) investment in the project.
Chinese stocks tumbled with the benchmark Shanghai Composite Index losing 2.6 percent, led by the teleco sector. China United Telecommunications sank more than 8 percent, in the wake of a restructuring announcement by Hong Kong-listed affiliate China Unicom.
Chinese telecom firms also dragged on the Hang Seng Index, which closed 1 percent lower, as they extended their previous session's losses amid bearish sentiment about China Unicom's proposed merger with China Netcom. UBS had cut its rating on China Unicomandreduced its target price, citing the wireless operator is overpaying to take over China Netcom. China Unicom sank 4.3 percent after it gave up over 14 percent on Tuesday.
Singapore's Straits Times Index closed 0.6 percent lower with some blue chips rebounding after yesterday's losses.