Asian stocks rose for the first time in three days on Thursday as U.S. housing data fueled optimism about the world's largest economy, while the yen was pressured by expectations that Japan's new political leaders will favor a weaker currency.
Solid sales growth for May from major U.S. automakers also helped the auto sector in Japan, while stocks in Seoul received an additional boost from foreign buying.
Japan's Nikkei average surged over 3 percent to a two-week high on Thursday and had its best one-day performance in six months, with foreign investors tentatively re-entering the market and technical signs turning brighter.
Exporters such as Canon rose as the yen weakened against the euro and after investors rushed back into U.S. stocks, having decided that a battering the previous day had gone
too far. Kawasaki Kisen and other shippers also gained.
But some wariness persisted towards the euro zone's debt crisis and uncertainty over Japan's political situation a day after the prime minister said he was resigning.
The benchmark Nikkei 225 gained 3.2 percent or 310.95 points to 9,914.19 for its best one-day performance since Dec. 3 and its highest close in two weeks. The broader Topix rose 2.4 percent to 890.64.
The resignation of Prime Minister Yukio Hatoyama on Wednesday in a bid to revive his party's flagging support did not have a big impact on Tokyo stocks, but the market was keeping a watchful eye as the ruling party geared up to pick a new leader on Friday.
Many expect fiscally conservative Finance Minister Naoto Kan to become the next prime minister. But analysts say it is not definite, making it difficult for investors to factor in.
Trading house Itochu climbed 4.2 percent to 749 yen after it formed an alliance with General Electric on investment in large wind and other renewable energy projects.
Automakers got an extra lift after U.S. industry-wide sales climbed 19 percent in May from a year earlier. In addition, Australian new vehicle sales hit a record high for May.
But analysts said the main factor was simply bargain hunting in auto shares that had languished over the last few weeks, with those with sharper falls, such as Nissan, seeing bigger gains.
Toyota Motor rose 3.6 percent to 3,350 yen and Nissan Motor gained 4.8 percent to 673 yen. Honda Motor gained 4.3 percent to 2,829 yen. Its parts factory in south China resumed full production on Wednesday after more than two weeks of disruption.
Seoul shares ended 1.93 percent higher on Thursday fueled by rallies in banking issues such as Woori Finance Holdings and renewed foreign buying as positive U.S. data renewed risk appetite.
The Korea Composite Stock Price Index(KOSPI) finished up 31.44 points at 1,661.84 points, the highest close in three weeks.
Financials rallied, with KB Financial Group jumping 7.32 percent and Hana Financial Group climbing 5.65 percent.
Woori Finance Holdings outperformed its peers, surging 8.56 percent, as hopes for its privatization strengthened after elections, analysts said.
Kia Motors rose 3.16 percent after it reported its May U.S. sales grew 20.6 percent from a year ago.
But Hyundai Motor fell 0.38 percent despite a firm 32.8 percent year-on-year rise in May U.S. sales on jitters about its domestic market performance.
Australia Ends Higher on US Data
Australian stocks broke a three-day losing streak to close 2.4 percent firmer, heartened by
encouraging U.S. economic data and bargain hunting in beaten-down banks and resource stocks.
Investors put aside negative sentiment over domestic problems, including the ongoing squabbles over a mining tax and concerns over company profits. However, brokers warned the
reprieve could be short lived.
Resource majors BHP Billiton and Rio Tinto led gains, rising 2.4 percent to A$38.74 and 3.4 percent to A$69.05 respectively.
Energy firms also followed suit. Santos made up the previous day's losses with a 3.6 percent gain to A$12.70, while Caltext added 3.3 percent to A$10.64.
AGL Energy was up 1.9 percent to A$14.33 after raising its forecast for underlying net profit after tax for the year to June to A$420-430 million ($353-$362 million).
Pressure increased on the Australian government on Thursday to water down a proposed mining tax after Xstrata threatened to scrap $5.4 billion in coal and copper projects in Australia.
The benchmark S&P/ASX 200 rose 104.97 points to 4,486.0, according to latest data, its first gains in three sessions.
The major banks, which had also been beaten down recently, also posted solid gains after U.S housing data fuelled optimism about the world's largest economy. Commonwealth Bank of Australia rose 3.2 percent to A$51.95, and National Australia Bank jumped 3.8 percent to A$25.09.
QBE, Australia's top insurer by premium income, rose 2.4 percent to A$19.07 after saying it had adequate protection for any claims that may arise from the Gulf of Mexico oil rig
disaster and UK motor insurance claims.
Shares in equipment hire group Boom Logistics leapt 35 percent to 40.5 cents after the company said it had a takeover approach from Archer Capital.
HK Rises on Investor Optimism, But Shanghai Lags
Hong Kong stocks rose 1.7 percent in the afternoon session on Thursday as financial and energy shares led gains aided by short-covering in large caps, while China's share market skidded with buying in smaller issues cushioning losses.
The benchmark Hang Seng snapped four sessions of lacklustre performance that included the end to a dismal month for the index which lost 6.4 percent amid a global sell-off in May.
The initial public offering from Agricultural Bank of China, which could total some $30 billion, and another potentially large listing of AIG's Asian unit after the collapse of its deal with Prudential could sap capital from the market.
China's key stock index shed 0.7 in choppy trading as sentiment remained cautious
and volume light, with gains led by small caps such as software shares which rose on news of government support measures.
China's benchmark Shanghai Composite Index was last quoted down 18.46 points at 2,552.95 points, after a 0.1 percent rise on Wednesday and a 3.3 percent slide over the previous two days.
China Software was the biggest gainer on the Shanghai market, jumping to its 10 percent daily limit, while Shandong Langchan Cheeloosoft, the third-biggest gainer, rose 9.4 percent.
Property stocks remained under pressure after local media reported that a senior official with China's powerful planning agency said the country was studying a possible nationwide
property tax but had no specific plan.
Taiwan stocks ended 2.3 percent higher on Thursday, with technology shares such as Acer leading a rebound as U.S. housing data fuelled optimism about the world's largest economy and demand for technology.
The main TAIEX jumped 164.57 points to close at 7,360.28, regaining the ground it lost in the previous session.
Acer, the world No.2 PC vendor, ended up 5.2 percent. Acer displayed e-books at Computex this week.
Hon Hai, the owner of Foxconn, rebounded 4.6 percent after falling to a nine-month closing low in the prior session. It said on Wednesday production line workers at Foxconn's southern China manufacturing hub will get a 30 percent pay rise.
In Southeast Asia, the Singapore market saw a broad-based advance on the back of Wall
Street's overnight rally. The benchmark STI climbed 2.2 percent to 2787.17 points.
Banks led gains among the blue chips. UOB was up 3.7 percent, OCBC advanced 3.4 percent and DBS rose 1.8 percent.
Malaysia's KLCI was also buoyed by the gains on Wall Street, rising 1.6 percent in the afternoon session. Among tech stocks, chipmaker Unisem rose 4.3 percent.