Asian stocks rose on Wednesday as investors cheered a manufacturing rebound in China and stronger-than-expected growth in Australia, while the yen inched up towards a 15-year peak against the dollar.

Asian stocks shrugged off a flat lead from Wall Street, reflecting belief that Asia's economic recovery could hold up relatively well compared to the United States, which faces the possibility of a double-dip recession.

China's official purchasing managers' index rose to 51.7 in August from a 17-month low of 51.2 in July, while Australia's economy grew a stronger-than-expected 1.2 percent in the second quarter.

The MSCI index of Asia Pacific stocks outside Japan rose 1 percent <.MIAPJ0000PUS>, led by commodity-related shares due to optimism about Chinese.

Japan's Nikkei average <.N225> hit a 16-month low in early trade, undermined by the stronger yen, but later reversed course. Seoul shares gained 0.9 percent as large-cap technology stocks such as Samsung Electronics <005930.KS> bounced.

The market is still concerned about the global recovery momentum, but based on fundamentals, some funds will flock from developed countries to Asia, said Daniel Chan, chief economist and wealth management strategist BWC Capital Markets in Hong Kong.

Overnight, both the Dow Jones industrial average <.DJI> and the Standard & Poor's 500 Index <.SPX> ended virtually flat as fears grew about a double-dip U.S. recession.

Investors also scrambled to buy safe U.S. Treasury debt. Yields on benchmark 10-year Treasuries recorded their largest monthly drop since late 2008, when markets were reeling from the Lehman Brothers collapse.

The Australian dollar rose 0.5 percent against the U.S. currency as strong growth revived the risk of a further rise in interest rates [nSGE67U0L3]. Against the yen, the Aussie climbed 0.8 percent.

The yen edged up towards a 15-year peak against the dollar, having shrugged off this week's monetary easing by the Bank of Japan and shifting the focus to whether Japan will intervene.

A sharp drop in dollar/yen, such as 1 to 2 percent or more in a single day towards the 80-yen level and below, is seen as the most likely scenario that would prompt Japan to stick its neck out and buy dollars.

But others expect yen-selling intervention soon.

Gold prices shed $3.24 to $1,245.75 an ounce after hitting a two-month high of $1,249.90 on Tuesday due to the uncertain economic outlook.

Crude gained 26 cents to $72.18 a barrel after tumbling 3.7 percent the previous day on signs U.S. stockpiles rose further last week and prospects of bad weather to suppress demand at the end of the driving season.

(Editing by Nick Macfie)

Australia China Japan