Asian Markets Wobble; Tokyo Gains, Sydney Slips

Asian stocks wobbled Wednesday with markets in Japan and South Korea finishing higher but Australia closing lower as investors bought back defensive sectors after a solid rally in the last few months left them wondering whether it would last.

The U.S. dollar fell to a four-month low as optimism about a global recovery and concerns about U.S. fiscal health reduced its safe haven appeal. Adding to souring sentiment on the dollar, a commentary in the Financial Times about the risk of the U.S. government losing its top credit rating touched a nerve among traders.

The euro rose to its highest point against the dollar in seven weeks, before easing back slightly. Crude oil hit a 6-month high, touching $60 before slipping back to trade above $59 a barrel, on hopes a potential recovery may prompt rising demand.

Japan's Nikkei 225 Average gained half a percent, inching back towards a six-month closing high struck earlier in the week, with Olympus jumping 12.8 percent after it forecast a return to profit this financial year, beating market projections for a loss. Nissan Motor added 6.2 percent after projecting a smaller-than-expected operating loss.

South Korea's KOSPI ended 0.7 percent higher, with LG Powercomm and LG Dacom spiking on growing hopes over their merger, while Dongbu Hitek was lifted for a second day by unit sale hopes.

Australian stocks slipped 0.5 percent, falling for the third straight session, as a rush of capital raisings which is not expected to end any time soon dragged on the market.

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Hong Kong stocks closed 0.6 percent lower. Fashion retailer Esprit Holdings said retail store sales rose 6 percent year on year for the nine months ended March 31, of which Europe posted the biggest increase of 6.9 percent.

Singapore's Straits Times Index rose 0.3 percent. Shares of Wilmar International, the world's largest palm oil firm, rose after the company announced an 11 percent rise in first-quarter net profit.

China's Shanghai Composite Index gained 1.7 percent, with coal and metal shares strong, after a second consecutive day of mixed economic data for April including strong retail sales and a slowdown in factory output. The April data offered encouragement to policymakers that consumer spending is helping to compensate for weakness in the industrial sector.