By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Asian markets rallied Thursday on the back of Wall Street's midweek surge.
Japanese shares extended gains with export-oriented issues such as Honda taking a starring role, while resource stocks in Sydney and Hong Kong rose amid high commodity prices and talk that BHP Billiton could be thinking over renewing an acquisitino effort for Rio Tinto.
Chinese stocks continued to be volatile. The Shanghai Composite recently dropped 2.1% to 3,222.74 -- its weakest finish since March 2007 -- turning lower as investors couldn't sustain buying that pushed it as high as 3,352.95 earlier in the day.
On Wednesday, the mainland's central bank increased banks' reserve requirement by half a percentage point, to 16%, in attempt to cool inflation. The central-bank responded soon after economic data showed China's inflation rose 8.3% from March 2007.
"We think Beijing now needs to balance inflation risk with growth risk, and hence don't expect serious tightening based on this set of data. We think the (reserve-requirement) hike is a gesture of tightening, which has preempted more serious measures for now," wrote Credit Suisse economists in a note.
Japan's Nikkei 225 Average finished 1.9% higher at 13,398.30, with the broader Topix index adding 1.7% to 1,293.32. Both Tokyo benchmarks thus extended their advance into a third session.
In Sydney, the S&P/ASX 200 advanced 0.9% to 5,519, also taking gains into a third session.
In Hong Kong, the Hang Seng Index gained 1.6% to 24,258.96, while the Hang Seng China Enterprises Index jumped 2.3% to 12,887.76.
Elsewhere, New Zealand's NZX 50 index rose 1.5% to 3,568.93, Singapore's Straits Times Index added 1.3% to 3,126.30, South Korea's Kospi climbed 0.6% to 1,768.67 and Taiwan's Weighted index gained 0.3% to 9,090.43.
And by late afternoon, India's Sensitive Index rose 1.3% to 16,456.23 and the broader S&P/CNX Nifty rose 1.4% to 4,955.60.
Shares of Japanese exporters were helped by the bullish action overnight on Wall Street as well as by a weakened yen. Shares of Canon /zigman2/quotes/207639533/delayed JP:7751 -2.15% /zigman2/quotes/210242912/composite CAJ +0.52% surged 5.1%.
Among automakers, Honda Motor Co. /zigman2/quotes/200490352/delayed JP:7267 -4.26% /zigman2/quotes/207173990/composite HMC -1.00% saw its shares add 4.1% and Toyota Motor Corp. /zigman2/quotes/203803129/delayed JP:7203 -3.48% /zigman2/quotes/200537742/composite TM -0.49% climbed 2.7%.
Toyota's gains came in the face of a Nikkei business daily report that the company's operating profit for the year ending March 31, 2009, is expected to decline about 20% as a result of slower U.S. sales and currency translations.
Also higher, shares of Hino Motors /zigman2/quotes/209422954/delayed JP:7205 -3.67% climbed 3.3% after the Nikkei reported that the company plans to stop producing trucks at its California plant because demand in North America for commercial vehicles has plunged.