Asian equities rose on Tuesday, with Shanghai and Japanese stocks closing at multi-year highs on hopes of Chinese stimulus and as investors dismissed Japan's rating downgrade.
Reuters reported late in the session that the People's Bank of China may unveil a cut in the reserve requirements for banks on the back of recent weak data. Official factory activity data earlier this week fell to an eight-month low, prompting talk of further aggressive intervention from authorities.
"It remains be seen if Moody's critiques have any merit. The ratings agencies have been notoriously wrong in their economic assessments of G-3. There are several reasons to be more optimistic about Japan's near-term prospects including the sharp fall in energy price and the rise in the exchange rate," Boris Schlossberg, managing director of FX strategy at BK Asset Management, said in a note.
Shanghai up 3.1%
Mainland shares closed at a fresh three-year peak, resuming their gains after snapping a seven-session winning streak on Monday.
Financial stocks were the best performers on the benchmark ; Founder Securities and China Merchants Bank shot up 10 percent each. Minsheng Banking was also 10 percent higher after announcing Anbang Insurance bought 5 percent of its shares.
Hong Kong shares recovered over 1 percent after closing at a one-and-a-half-week low on Monday.
Nikkei 0.4% higher
Japanese stocks ended at a new seven-year high for the second straight day, reversing earlier losses as the yen weakened to 118.51 per dollar.
Fast Retailing, operator of Uniqlo stores, fell 0.4 percent ahead of releasing sales figures later in the day.
ASX 1.4% higher
Australia's benchmark S&P ASX 200 recovered after dropping to its weakest level since October 14 on Monday. The Australian dollar rose back above 85 U.S. cents following Monday's four-year low after the Reserve Bank of Australia kept interest rates unchanged at its policy review, as widely expected.
Data showing the country's third-quarter current account deficit came in smaller-than-expected at A$12.5 billion also boosted sentiment.
South Korean shares erased losses in the final hour of trade. Earlier in the session, shares hit a one-and-a-half week low after data showed November inflation slowing to a nine-month low.
Nifty down 0.4%
Indian shares widened their losses after the Reserve Bank of India left interest rates on hold, as expected.