HSI, Nikkei, ASX lead gains in Asia markets while Shanghai slips 0.2%

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Asian markets tacked on gains on Thursday despite mostly poor economic data, although Chinese markets fell behind their region peers.

Chris Weston, chief market strategist at IG, said in an afternoon note, "Asian stocks have flown out of the gate and there almost feels like we could be seeing the start of FOMO (Fear of Missing Out) trading."

"To many, losing money is only moderately worse than missing an opportunity and the flows today have been reminiscent of this phenomenon," he explained.

The Japanese benchmark index, the Nikkei 225, closed up 360.44 points, or 2.28 percent, at 16,196.80, while across the Korean Strait, the Kospi finished up 24.90 points, or 1.32 percent, at 1,908.84. Hong Kong's Hang Seng index added 438.51 points, or 2.32 percent, to 19,363.08.

Down Under, the S&P/ASX 200 gained 109.90 points, or 2.25 percent, to 4,992, moving closer to the psychologically key 5,000 level. The energy sector led the gains, up 5.3 percent, while financials gained 2.34 percent.

Chinese markets ended the session down, with the Shanghai composite losing 4.49 points, or 0.16 percent, to 2,862.83 and Shenzhen composite falling 6.23 points, or 0.33 percent, to 1,841.41.

This followed the release of China's inflation data for January. Consumer inflation quickened to 1.8 percent year-on-year, falling short of market expectations despite a boost from the Chinese New Year. A Reuters poll predicted the consumer price index would be at 1.9 percent, compared to 1.6 percent posted in December.

The producer price index fell 5.3 percent in January, following a 5.9 percent drop in December.

Japan's January exports slumped 12.9%

Earlier, Japan's Ministry of Finance released data that showed the country's January exports fell 12.9 percent at an annual rate on-year, worse than analysts' expectation of a 11.3 percent drop while imports were down 18 percent on-year. Exports to China, one of Japan's biggest trading partners, slipped 17.5 percent in January.

Harumi Taguchi, principal economist at IHS Global Insight, said in a note that Japan's seasonally adjusted trade balance remained in a surplus, while official data showed non-seasonally adjusted trade balance for January was in deficit.

"Lower oil prices and the yen's strength, in addition to the weak domestic demand, raises the likelihood of a trade surplus on a continuing monthly basis," said Taguchi.

"That said, the softer outlook for the global economy and downside from yen strengthening could weigh on exports and limit the improvement of the trade balance over the near term. Sustained weakness for external demand remains a downside risk for Japan's production and real GDP growth," she added.

Despite the disappointing trade numbers, most Japanese stocks, including the trading houses that supply everything from energy to metals to grains and textiles in resource-scarce Japan, finished up. The big five trading houses, Mitsubishi, Mitsui, Sumitomo, Itochu, and Marubeni, gained between 2.79 and 8.61 percent.

The yen strengthened against the dollar, with the dollar-yen pair trading down 0.21 percent at 113.84 as of 2.30 p.m. HK/SIN time, compared to yesterday's close of 114.04.

While a stronger yen is usually a negative for exporters as it reduces their overseas profits when converted into local currency, major exporters such as Toyota, Honda, and Sony followed the rally on the benchmark index to close up between 1.71 and 3.55 percent.

Banks were also a focus in the region with Japanese banks gaining between 1.78 and 2.86 percent, with Mitsubishi UFJ leading the pack. The Japanese overnight call rate, which is the benchmark lending rate between banks, fell to negative levels on Wednesday. Earlier this week, Japan's negative interest rate policy kicked in as concerns over the long-term profitability of the banks lingered.

Chinese banks were also in investors cross-hairs after multiple reports emerged about fraudulent loans and money laundering.

The Financial Times reported that fraudulent loans are on the rise in China as economic growth slowed, threatening to undermine the mainland banking system. The FT reported the latest victim was the Bank of Liuzhou, where 32.8 billion yuan ($4.9 billion) in fraudulent loans were discovered late last year. The number represented more than 40 percent of the bank's total assets of 80 billion yuan at the end of 2014.

Overnight, there were reports that authorities in Spain had raided the office of the Industrial and Commercial Bank of China as part of a money laundering probe.

U.S. crude gains 2% in Asian hours

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The March contract for U.S. crude was up 2.05 percent at $31.29 a barrel at 3.20 p.m. HK/SIN, while global benchmark Brent rose 0.78 percent to $34.77.

Energy plays across the region were mostly up; Santos gained 7.60 percent, Inpex added 6.09 percent, and Woodside Petroleum was up 4.58 percent.

Chinese oil plays on the mainland were, however, mostly down; Petrochina shed 1.06 percent. Yesterday afternoon local time, ratings agency Moody's said it was putting a number of Chinese national oil companies up for a review for downgrade, in line with reviews it had undertaken in other regions.

Oil prices rose sharply overnight after an unexpected drop in crude inventories, which fell by 3.3 million barrels in the week to Feb. 12 to 499.1 million, compared with analysts' expectations for an increase of 3.9 million barrels.

Elsewhere, Iran's oil minister Bijan Zanganeh said that while he supported a production ceiling to stabilize oil prices - as mooted by big producers Saudi Arabia and Russia - it was the first of several steps that should be taken, according to Reuters reports that quoted the ministry's official Shana news agency.

OPEC ministers had traveled to the Persian state to talk about a possible production freeze deal between global oil producers.

Juan Prada from Barclays said in a note that though Iran did not commit to freezing its own output, "the market looked through Iran's apparent lack of commitment."

Earnings season Down Under

It's earnings season in Australia and Telstra, Australia's largest telecommunications company, reported its earnings before market open, posting a first-half net profit of A$2.09 billion ($1.5 billion), up just 0.4 percent on-year. The number was below expectations according to a Wall Street Journal poll that put consensus at A$2.15 billion. The interim dividend was set at 15.5 Australian cents (11 cents) per share.

Speaking to CNBC, Telstra's chief financial officer Warwick Bray called the results "sound."

"We grew at all levels, of our PNL, income statement, our EBITDA, our net profit after tax. We were pleased to increase the dividend for the second time in four years," he said. "What's important to us is that we increase the customer numbers as well. For example, there are 235,000 new mobile customers," Bray added.

Profit margins for Telstra's mobile division came under pressure due to intense competition in the market.

Bray acknowledged the competition and said Telstra aimed to meet it with innovation.

"We see more and more opportunities to differentiate in mobile so network is becoming more important to our customers and what we seen on the business side of things is that they are looking to us for us to provide productivity applications, and on the consumer side of things they are looking for us to provide services...and content."

Shares of Telstra closed up 0.56 percent.

Treasury Wine Estates reported a rise in net profits for the six months through December, up at A$60.6 million ($43.53 million) from A$42.6 million a year earlier. The wine producer saw its shares gain 4 percent.

Elsewhere banks and resources producers saw support with most major stocks closing up. Australia's so-called Big Four banks - ANZ, Commonwealth Bank of Australia, NAB, and Westpac - gained between 2.51 and 2.78 percent.

Miners such as Rio Tinto gained 3.06 percent, BHP Billiton up by 6.07 percent, and Fortescue tacking on 11.47 percent.

Between earnings and gains in equity market, Australia's employment data fell below expectation. Numbers released by the Australian Bureau of Statistics showed a net 7,900 jobs were lost in January in contrast to analysts' expectation for a rise of around 15,000. This followed the 1,000 jobs lost in December.

The unemployment rate was at 6 percent.

Shane Oliver, head of investment strategy and chief economist at AMP Capital, said in a note that the softer-than-expected jobs data followed strong employment growth in October and November.

"So the jobs market could be at last heading back to reality which is that employment growth is solid consistent with that implied by ANZ job ads and various business surveys but running at around 1.5 per cent year-on-year and not the circa 3 percent year-on-year recently reported by the ABS. If so this could see the unemployment rate remain around 6 [percent] or even drift up a bit in the months ahead," he said.

Overnight in the U.S.

Stateside, the U.S. Federal Reserve's January meeting minutes were released, in which policymakers worried that tighter global financial conditions could hit the U.S. economy and considered changing their planned path for rate hikes in 2016.

Major indexes on Wall Street closed up; the Dow Jones industrial average gained 257.42 points, or 1.59 percent, at 16,453.83. The S&P 500 was up 31.24 points, or 1.65 percent, at 1,926.82 and the Nasdaq composite closed up 98.11 points, or 2.21 percent, at 4,534.06.

Reuters contributed to this report.

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