ASIA MARKETS: Japan Stocks Jump, As Hong Kong Extends Gains

By V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) -- Japanese stocks jumped Tuesday on a weakened yen and a report the government is considering a cut in corporate taxes, while Hong Kong shares rose for a fourth straight day amid optimism over the Chinese economy.

Japan's Nikkei Stock Average climbed 2.6% to lead a broad rebound in Asia, South Korea's Kospi rose 1.5%, Australia's S&P/ASX 200 gained 1%.

Hong Kong's Hang Seng Index advanced 1.2%, and the Shanghai Composite inched 0.2% higher.

"Investors are digesting the deluge of July activity data [for China] late last week, the main highlight of which was acceleration in exports, industrial production and M2 [money supply growth]. These are hopeful signs of economic recovery in the second half of the year," said ING Financial Markets economist Prakash Sakpal.

The broad advances came in spite of weak overnight cues from Wall Street, where the Dow Jones Industrial Average (DJI) and the Standard & Poor's 500 Index (SPX) ended lower Monday, while the Nasdaq Composite (RIXF) saw a mild gain.

"Investors seem to be weighing the positives of an improving U.S. economy against the negatives of a weak global economy and the potential for the [Federal Reserve] to taper its bond-purchase program this fall," said Wells Fargo Advisors chief macro strategist Gary Thayer.

The solid gains in Tokyo also got help from a report in the Nikkei newspaper Tuesday that Prime Minister Shinzo Abe may propose a reduction in corporate taxes if he decides in favor implementing a planned increase in the consumption tax.

Among the major movers in Japan, shares of Fuji Heavy Industries Ltd. (FUJHY) spiked 5.6%, Softbank Corp. (9984.TO) soared 6.3% and Renesas Electronics Corp. (RNECY) climbed 5.4%.

Data released earlier in the day showed Japan's core machinery orders fell 2.7% in June, a milder decrease than expected.

Chinese property shares added to their recent gains, following a Reuters report that the eastern city of Wenzhou has become the first to ease restrictions on real-estate purchases.

Shares of China Overseas Land & Investment Ltd. (CAOVY) rose 2.3% and China Resources Land Ltd. (CRBJF) surged 6% in Hong Kong, while Gemdale Corp. gained 1% in Shanghai.

In Sydney, shares of Stockland declined 2.9% after the developer and real-estate investor posted a 79% drop in full-year profit.

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