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Asia markets close mixed; energy plays get boost as oil holds above $50

Asian markets closed mixed on Wednesday, amid a muted reaction to China's May trade data, but the energy sector got a boost after oil prices settled above $50 a barrel on Tuesday for the first time in nearly 11 months.

The Nikkei 225 reversed morning losses to close up 155.47 points, or 0.93 percent, at 16,830.92, after the yen weakened against the dollar. The dollar-yen pair traded at 107.06 as of 3:39 p.m. HK/SIN, compared with an earlier session low of 106.7. In the Tuesday session, the dollar/yen traded at levels near 107.9.

Stephen Innes, a senior trader at OANDA Asia Pacific, attributed the dollar/yen's fall to the prospects of lower-for-longer U.S. interest rates and uncertainty over the Bank of Japan's next likely move at its policy meeting later this month. In a note Wednesday, he also said that Japan's policymakers appear to be showing a "lack of urgency," with Prime Minister Shinzo Abe only planning to propose an economic stimulus package in the autumn, after July elections.

Chinese mainland markets closed lower, with the Shanghai composite down 9.34 points, or 0.32 percent, at 2,926.69, and the Shenzhen composite was off by 6.25 points, or 0.32 percent, to 1,918.62. In Hong Kong, the Hang Seng index was down 30.36 points, or 0.14 percent, at 21,297.88. In South Korea, the Kospi advanced 15.45 points, or 0.77 percent, to 2,027.08.

In Australia, the ASX 200 finished flat at 5,369.97, with a 0.15 percent decline in the financials sub-index that accounts for nearly half of the broader index.

Major banking stocks finished mostly lower, with ANZ down 0.52 percent, Commonwealth Bank of Australia off by 0.45 percent and NAB down 0.45 percent. Westpac shares beat their peers to close up 0.29 percent.

Moody's Investors Service said on Wednesday that Australian banks face increased tail risks from rising house prices in the country. Re-acceleration of house prices and increasing household leverage "raise the banks' sensitivity to downside risk in the housing market, and can lead to potential second-order impacts on broader economic activity."

Earlier, data released showed the value of Australia's home loans for investment in April fell 5 percent from March, but owner-occupied finance rose 1.7 percent on-month on a seasonally adjusted basis, although that was below a Reuters poll forecast for a 2.5 percent rise.

"Looking through the volatility, the data remain consistent with the declines in building approvals over the first half of 2016 and our view of a diminishing tailwind from housing construction over the year and a deeper downturn into 2017," analysts at Goldman Sachs said in a note.

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Oil prices advanced overnight on expectations of stockpile drawdowns in the U.S. and global supply shortfalls. Reuters said a report from the American Petroleum Institute, released after prices settled, showed a higher-than-expected crude drawdown of 3.6 million barrels.

During Asian hours, U.S. crude futures were up 0.1 percent at $50.41 as of 3:53 p.m. HK/SIN, after settling up 1.4 percent on Tuesday. Global benchmark Brent was nearly flat at $51.46, following a 1.8 percent increase overnight.

Energy plays in the region were higher, with Santos shares closing up 2.6 percent, Oil Search higher by 2.5 percent and Japan Petroleum up 1.76 percent. Chinese mainland oil stocks were mostly positive, with Sinopec shares up 0.16 percent.

In the currency market, the dollar traded at 93.730 against a basket of currencies as of 3:54 p.m. HK/SIN, slipping from around 93.869 earlier in the session and down from levels above 95 on Friday, after a disappointing U.S. jobs report spurred analysts to walk back expectations of a potential interest rate hike from the U.S. Federal Reserve in June. The greenback had a muted reaction to a speech that Fed chair Janet Yellen gave on Monday, where she insisted that the Fed needed to raise rates, but stepped back from giving a time frame.

"Now that Yellen's speech is behind us, there are no major U.S. economic reports scheduled for release this week so the drop in yields, new year-to-date high in the S&P and falling expectations for a July rate hike fueled the follow through selling [in the dollar]," said Kathy Lien, managing director of foreign exchange strategy at BK Asset Management.

Matthew Lloyd | Bloomberg | Getty Images

In China, May's soggy trade data offered the latest sign that the world's second-largest economy was still a long way off from full health. Exports in dollar-denominated terms fell 4.1 percent on-year, compared with April's 1.8 percent decline. Imports fell 0.4 percent on-year, narrower than April's 10.9 percent drop.

ANZ analysts Raymond Yeung and Louis Lam said trade outlook in China is likely to remain "stubbornly stable."

"We need to wait for a firmer recovery in the U.S. and Europe so that China's export growth can sustain a positive growth. For imports, even though we do not expect a strong rebound in the near term as domestic demand will likely edge down on a tighter credit environment, China will likely see a sizable trade surplus in the next few months," they said.

The analysts also noted that in yuan-denominated terms, imports grew 5.1 percent on-year in May, suggesting that domestic demand had improved.

Before market open, Japan's revised first quarter gross domestic product numbers showed the economy expanded at a 1.9 percent annualized rate, up from the preliminary reading of 1.7 percent.

In Tokyo, Japan Display shares ended up 5.34 percent. Reuters reported, citing people familiar with the matter, that Japan Display's top investor, the state-backed Innovation Network Corp. of Japan, is set to meet with other lenders to discuss the health of the smartphone display maker. Reuters said according to the sources, the Apple supplier received a short-term loan of 30 billion yen ($280 million) from the lenders in late May.

In South Korea, the finance minister said on Wednesday the government and the Bank of Korea will create an 11 trillion won ($9.50 billion) fund to support the two state-run banks most exposed to the shipping and shipbuilding firms currently being restructured, reported Reuters.

Shares of shipbuilders closed mixed. Hyundai Heavy Industries shares were up 1.76 percent, Samsung Heavy Industries was off by 1.47 percent and Daewoo Shipbuilding & Marine Engineering was down 1.33 percent.

Trinh D. Nguyen, a senior economist for emerging Asia at Natixis, said of the announcement, "The [South Korean] economy needs help. Shipbuilders and their lenders are most impacted by a subdued global trade cycle. While this is not a Korean-specific story, this is no respite as their real debt is rising as orders wane. And their under-performance is impacting other sectors, such as banking."

Major U.S. indexes closed mixed, with the Dow Jones industrial average up 17.95 points, 0.1 percent, at 17,938.28. The S&P 500 added 2.72 points, 0.13 percent, to 2,112.13 and the Nasdaq composite was lower by 6.96 points, or 0.14 percent, at 4,961.75.