Share markets in Asia rebounded on Thursday as worries that China's policy tightening would slow its demand receded, while strong Australian jobs data raised the chances of a February interest rate hike and boosted the Aussie dollar.
Helped by an upbeat day on Wall Street, Asia stocks recouped 1 percent, having tumbled on Wednesday after Beijing's surprise increase of bank reserve requirements -- China's strongest step yet to rein in asset inflation. <.N>
In Australia, shares <.AXJO> rose nearly 1 percent as miners gained, while jobs data for December beat forecasts and the market priced in a 75 percent chance of a rate rise at the next policy meeting, sending the Aussie dollar up and the low-yielding yen down.
Shanghai's key stock index <.SSEC>, which fell 3.1 percent on the monetary tightening, struggled to hold gains but Tokyo's Nikkei index <.N225> neared a 15-month high and the MSCI index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> rose 1 percent, heading back toward a recent 17-month high.
Tech and materials stocks led the rebound, gaining ground after being hit a day earlier by concern that China's purchases of imports could suffer if policy tightening cooled its rapid economic growth.
The market is recovering as investors are relieved to see U.S. shares recover fairly quickly after news of China's monetary tightening moves, said Lee Kyoung-su, a market analyst at Taurus Investment & Securities.
Technology issues in particular are going strong amid strengthening earnings expectations. Positive hopes are brewing ahead of key U.S. technology company earnings, including Intel
A rebound had already begun in some markets by late Wednesday as investors took the view that China's step confirmed a broad economic recovery and threatened neither growth nor corporate profits.
The Dow Jones industrial average <.DJI> ended up 0.50 percent while the Standard & Poor's 500 Index <.SPX> climbed 0.83 percent and the Nasdaq Composite Index <.IXIC> 1.12 percent.
Seoul shares <.KS11> rose 0.9 percent, helped by rebound in shipbuilders and technology issues including LG Display <034220.KS> and Hyundai Heavy Industries <009540.KS>, while POSCO <005490.KS> edged up before its quarterly results.
In China, banks and property stocks initially gained but top lender Industrial and Commercial Bank of China <601398.SS> later fell 0.8 percent and the main index <.SSEC> was flat.
In Japan, Mizuho Financial Group <8411.T>, the country's second-largest bank by assets, is considering a rights offering as a way to boost its capital, Bloomberg reported.
The bank shed more than a third of its market value in 2009 on concerns it would need a massive capital raising to meet stricter global rules. But its shares rose 5.1 percent on Thursday, with analysts saying a rights issue eased worries about share dilution.
The Australian dollar advanced 0.6 percent to $0.9295, with traders looking for a move beyond its 2009 peak of $0.9407. It climbed 0.9 percent to 85.16 yen.
A net 35,200 new jobs were created in Australia in December and the jobless rate dropped to 5.5 percent, the lowest since April.
The Australian dollar gained last year as the market anticipated the central bank would lead other developed nations in tightening policy. It has already lifted its key cash rate by 75 basis points to 3.75 percent in contrast to the likes of the United States and Japan where rates are close to zero.
The positive news from Australia has cheered investors, prompting them to seek more risks, said Hideki Amikura, deputy general manager at Nomura Trust and Banking in Tokyo.
The yen also lost ground against the dollar, euro and New Zealand dollar. The dollar index <.DXY>, a measure of its performance against six other major currencies, eased 0.1 percent.
The euro rose 0.2 percent to $1.4540 as market players waited for a European Central Bank meeting at which it is expected to flag that it will keep rates at a record low of 1.0 percent for some time.
U.S. crude futures were steady after falling for three days in a row on builds in U.S. inventories despite colder weather. NYMEX crude for February delivery stood at $79.86 a barrel after a settling at $79.65 on Wednesday.
Spot gold edged up to $1,141.90 per ounce, compared with New York's notional close of $1,137.60.
(Additional reporting by Jungyoun Park in Seoul, Rika Otsuka in Tokyo)
(Editing by Kim Coghill)