ASIA MARKETS: Japan, Australia Stocks Rebound, Leading Asia

By V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) -- Most Asian stocks advanced Wednesday as a higher finish for U.S. equities and gold prices encouraged buyers, and with Japanese shares rebounding after a three-day losing streak as the yen weakened.

The advance followed an unexpectedly strong increase in U.S. housing starts and better-than-expected earnings from companies including as Coca-Cola Co. (KO) and BlackRock Inc. (BLK) that spurred major stock indexes on Wall Street to gains of at least 1.1% overnight.

"Following a string of gloomy global economic data and a near meltdown in commodities, equity investors seem determined to cling to the coattails of the American dream and are once again bouncing to the tune of an expected continuation of monetary stimulus," said CMC Markets sales trader Niall King.

Australia's S&P/ASX 200 gained 0.9%, while Hong Kong's Hang Seng Index and Taiwan's Taiex each edged 0.1% higher.

However, China's Shanghai Composite Index and South Korea's Kospi dropped 0.3% each in choppy trading.

Japan's Nikkei Stock Average climbed 0.9%, as the U.S. dollar climbed back above Yen98, and after Credit Suisse on Tuesday raised its rating on Japanese equities to overweight.

Gains in Tokyo also took support from the International Monetary Fund's upgrade of the country's economic growth outlook for 2013 to 1.6%, applauding Japan's aggressive new monetary easing, even as it downgraded U.S. forecasts.

Shares of Sony Corp. (SNE) climbed 1.8%, index-heavyweight Fast Retailing Co. (FRCOY) rose 1%, shipping firm Kawasaki Kisen Kaisha Ltd. added 2.8% and Mazda Motor Corp. (MZDAY) jumped 4% in a bounce spread across sectors.

"Risk sentiment as suggested by U.S. stock markets is unlikely to deteriorate sustainably. ... Any further weakening of Chinese growth expectations may result in renewed easing expectations," said strategists at Crédit Agricole.

"We remain of the view that dips [in U.S. dollar versus the yen] should be bought, as the pair is ultimately still set to move higher," they said.

Shares of Nomura Holdings Inc. (NMR) dropped 1.2% after Italian police froze 1.8 billion euros ($2.35 billion) in funds from a unit of the investment bank as part of an investigation into Banca Monte dei Paschi di Siena . The case stems from a structured-products transaction that the Nomura unit worked on with Monte dei Paschi.

Telecommunications firm Softbank Corp. (9984.TO) edged up 0.3%, after suffering heavy losses Tuesday after Dish Network Corp. (DISH) trumped its takeover bid for U.S. firm Spring Nextel Corp. (US-S)

In Hong Kong, property developers and airline stocks helped underpin the advance. Shares of China Overseas Land & Investment Ltd. (CAOVY) rose 2.1%, while Cathay Pacific Airways Ltd. (CPCAY) climbed 3.2%.

A few gold-linked stocks saw a mild recovery after recent losses, with gold miner Newcrest Mining Ltd. (NCMGY) climbing 0.7% as gold futures settled higher overnight. In Hong Kong, Chow Tai Fook Jewellery Group Ltd. (CJEWY) rose 1.9%.

BHP Billiton Ltd. (BHP) fell 0.4% in Australia after reporting that its iron-ore output increased less than expected in the fiscal third quarter.

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