ASIA MARKETS: Hong Kong, Australia Stocks Stage Rebound

By V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) -- Stocks in Hong Kong and Australia bounced back on Thursday after better-than-expected U.S. economic data spurred gains on Wall Street, while a strengthened yen dragged on Japanese shares.

The Hang Seng Index climbed 1.6% in Hong Kong and the S&P/ASX 200 advanced 1% in Sydney after both benchmarks suffered big losses Wednesday after a weak set of data on the services sector in China.

China's Shanghai Composite overcame early losses to end 0.6% higher, while South Korea's Kospi gained 0.8%. Japan's Nikkei Stock Average fell 0.3%.

The region's broad gains followed an overnight advance for U.S. equities after data painted a brighter employment picture, with a report showing a stronger-than-estimated increase in private-sector jobs, while weekly jobless claims unexpectedly declined.

"Things in the U.S. are looking reasonably solid, which is a good long-term foundation for financial markets, even though growth remains sub-trend. The key in this world remains earnings and we will soon see whether U.S. optimism on that front is justified," said Matthew Sherwood, head of investment market research at Perpetual.

The drop came amidst caution ahead of the U.S. nonfarm payrolls report Friday, which is expected to help shape the outlook for the Federal Reserve's bond purchases -- a key force behind a rally in global equity markets for several quarters.

Shares of several energy producers advanced after a recent rally in U.S. benchmark crude-oil futures amid worries over the political turmoil in Egypt, where the military ousted President Mohammed Morsi on Wednesday.

Cnooc Ltd. (CEO) gained 2.1% in Hong Kong, Inpex Corp. (IPXHF) inched up 0.3% in Tokyo and Woodside Petroleum Ltd. (WOPEY) climbed 3% in Sydney, recovering some of the losses Wednesday, when it fell after lowering its 2013 production target.

Coal miners and property developers also jumped in Hong Kong to pare the losses this week. China Coal Energy Co. (CCOZY) jumped 5.4%, China Shenhua Energy Co. (CSUAY) rose 5.5% and China Resources Land Ltd. (CRBJF) gained 4.5%.

Shares of large Chinese banks underperformed the broader market in Shanghai, following a media report that loans made by the country's four largest banks dropped in June because of a recent liquidity crunch in the interbank money markets.

Industrial & Commercial Bank of China Ltd. (IDCBY) fell 0.8% and Bank of China Ltd. (BACHY) dropped 0.4%.

Over in Tokyo, many exporters dropped on a firmer yen. Nissan Motor Co. (NSANY) fell 1.4% and Canon Inc. (CAJ) declined 1%.

Bank of Japan Gov. Haruhiko Kuroda said earlier in the day the local economy was improving and that consumer prices were expected to gradually rise as the effect of the central bank's quantitative easing took hold.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires