Asian Markets Rally, Tokyo Closes 4.6% Higher

Asian markets rallied Thursday, as encouraging signs about the health of U.S. banks and the state of the global economy bolstered riskier assets such as oil and hurt safe-havens such as the yen.

Nearly eight months after Lehman Brothers collapsed, leaked stress test results for U.S. banks suggested they were healthier than previously thought, even if some institutions such as Bank of America are expected to have to raise more money than estimated.

The MSCI index of Asia-Pacific stocks outside Japan gained 1.6 percent on Thursday, and has now risen every day this week. The gauge has now risen an astounding 50 percent since its post-Lehman crisis low in mid-September as investors are increasingly focusing on the positive signs and disregarding other signs that show that any recovery in the global economy or the financial system is unlikely to be swift.

The U.S. dollar rose against the yen. Crude oil prices climbed to a five-month high, trading above $56 a barrel, on a surprise drop in U.S. gasoline inventories.

Japan's Nikkei 225 Average hit a six-month closing high, rising 4.6 percent on the back of soaring bank shares as investor relief about the U.S. financial system grew. Mitsubishi UFJ Financial Group surged more than 15 percent and Mizuho Financial Group, which was buoyed as well by a brokerage upgrade, jumped 12.1 percent.

Seoul shares ended half a percent higher, but gave up much of their earlier gains as tech exporters fell on the back of a strengthening won, while shipping firms tracked rises in the Baltic dry index.

Australian stocks rose 1.85 percent to a six-month closing high, led by miners such as BHP Billiton and Rio Tinto, as positive signs on jobsin both the U.S. and Australia added to growing optimism the worst of the recession may be past.

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Hong Kong shares ended 2.3 percent higher, hitting a seven-month high as investors take comfort from a sharp rally overnight on Wall Street. China Construction Bank soared 5.1 percent to a seven-month high on hopes that China's main sovereign investment fund would take up a substantial portion of the sale of shares owned by Bank of America.

Singapore's Straits Times Index close 2.9 percent higher. However, financials are not faring well with UOB and DBS Group both in negative territory.

China's Shanghai Composite Index closed 0.2 percent higher in heavy trade, but coal and property shares were weak.