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Asian Stocks Mostly Higher on Rate Cut Hopes

Asian markets were mostly higher, helped by property and bank shares, on hopes policymakers will follow the Fed's lead and cut rates with abandon to spur growth. But the U.S. dollar sank to 13-year lows against the yen.

The weakening dollar has not provided much support for oil prices , which traded around $40 a barrel after U.S. crude for January delivery fell as low as $39.19 earlier in the session, the lowest since July 2004. The Organization of the Petroleum Exporting Countries, eager to build a floor under dipping prices, announced on Wednesday it would slash production by 2.2 million barrels a day.

Against the yen , the dollar climbed 0.6 percent to 87.75 yen after plumbing a 13-year low overnight of 87.13 yen. A sustained drop below 90 yen, a psychologically important level for the market, has sparked concern Japanese officials could intervene to cap the yen's gains.

Japan's Finance Minister Shoichi Nakagawa said he would not comment on whether the ministry would enter the market. The stance was different from just a week ago when Nakagawa said flatly he was not thinking about whether Japan should intervene.

Japan's Nikkei 225 Average edged up 0.6 percent, as banks such as Sumitomo Mitsui Financial Group jumped on expectations the Bank of Japan will follow the Federal Reserve's move to lower interest rates to near zero.

Seoul shares closed half a percent higher but ended off the session high as some techs slid on renewed profit worries, while banks declined despite news of South Korea's $15 billion recapitalisation plan. But some issues in crude refining and transporting sectors rose on growing strength in the won currency.

Australian stocks rose 0.3 percent as a recovery in telephone firm Telstra helped offset a fall in Commonwealth Bank of Australia after a disputed capital raising. CBA shares lost 9 percent after it issued A$1.65 billion worth of shares, while also warning of increased loan impairments. The bank raised its forecast 2009 loan impairment expense to A$2.5 billion versus a recent market consensus of A$2.02 billion.

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Hong Kong shares dropped 0.2 percent with HSBC Holdings sliding 3.4 percent on concerns over dividend cuts and potential capital raising at Europe's largest bank, but property stocks continued to rally, limiting losses. China Communications Services fell sharply after CISCO cut its stake in the telecom services provider by nearly half, selling 90 million shares.

Singapore's Straits Times Index was 1.1 percent higher. China's Shanghai Composite Index was 2 percent higher, despite persistent concerns over corporate earnings outweigh Beijing's fresh measures to boost the property market.