ASIA MARKETS: Japan, Australia Stocks Extend Gains

By V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) -- Australian stocks rose for a sixth straight trading day, and Japanese shares resumed their advance after a three-day weekend on Tuesday, as strong results from Citigroup Inc. helped lift key U.S. indexes to record highs.

Japan's Nikkei Stock Average rose 0.8%, after also climbing in the two sessions prior to Monday's holiday.

Australia's S&P/ASX 200 gained 0.3%, but South Korea's Kospi slipped 0.1%.

The S&P 500 (SPX) and the Dow Jones Industrial Average (DJI)each set fresh record closing highs Tuesday after Citigroup posted better-than-expected quarterly results, despite a weak U.S. retail sales report.

"Earnings season is taking on renewed interest as companies which have rallied strongly over the past 13 months now must prove that their recent surge is justified by earnings delivery," said Perpetual head of investment market research Matthew Sherwood.

"This will be no easy feat as U.S. cost savings are now exhausted and earnings growth is now dependant on revenue growth and a sub-trend U.S. economy," Sherwood said.

Exporters were broadly higher in Tokyo as the U.S. dollar (USDJPY) weakened from the levels seen around Friday afternoon to trade around the Yen100 mark.

Canon Inc. (CAJ) advanced 2.8%, and Nissan Motor Co. (NSANY) added 1.5%.

Fuji Heavy Industries Ltd. (FUJHY) added 1.7% after the Nikkei newspaper reported over the weekend that the Subaru-brand vehicle maker is expected to report a record quarterly operating profit.

Miners were mostly higher in Sydney on the positive lead from Wall Street, although Rio Tinto Ltd. (RIO) retreated in choppy trading ahead of the company's quarterly production report, expected to show a hit from weather in Pilbara region.

"Attitudes toward resource stocks will be set by Rio's production report. Investors will be expecting an improvement of 5%-6% in Rio's second-quarter iron-ore production to offset concerns over potential future price weakness," said CMC Markets chief market analyst Ric Spooner.

Shares of BHP Billiton Ltd. (BHP) gained 0.5%, and Fortescue Metals Group Ltd. (FSUMY) advanced 1.4%, while Rio traded fractionally lower.

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