ASIA MARKETS: Asia Stocks Buoyant At Month's End

By Sarah Turner, MarketWatch

SYDNEY (MarketWatch) -- Asia stocks moved off early lows to mostly gain on Friday, the last trading day of a month that has seen sharp divergence in performance for the region's major markets.

Friday trading saw Japan's Nikkei Stock Average rise 0.8% and Australia's S&P/ASX 200 index advance 0.7%.

Chinese markets were also advancing, with Hong Kong's Hang Seng Index up 0.6% and the Shanghai Composite Index 0.2% higher, although it continued to hover around four-year lows.

South Korea's Kospi traded flat after losing ground early in the session.

Asia's advance followed modest gains for U.S. equity markets on Thursday, with the upside limited by uncertainty that U.S. politicians will succeed in hammering out a deal to prevent more than $600 billion in tax hikes and spending cuts from taking place automatically in January.

Dampening sentiment, Republican U.S. House Speaker John Boehner said Thursday morning there has been "no substantive progress" in negotiations on the so-called fiscal cliff, briefly rattling Wall Street.

IG Index strategist Stan Shamu said the back-and-forth on the fiscal cliff would likely fuel market volatility through the end of December.

"Many [are] now convinced that negotiations will mirror that of last August's debt-ceiling disaster and go right down to the wire. As a result, a choppy last month of the year is probably the most likely scenario, disappointing those hoping for a Santa Claus rally," Shamu said.

The term "Santa Claus rally" refers to a year-end gain for shares that tends to start in December.

Still, U.S. economic data Thursday suggested the recovery continued, and Japanese data out Friday resulted in a set of consumer inflation, unemployment and household spending data that, while remaining relatively weak, either met or exceeded economist expectations.

After the release of the data, the Japanese government announced that it has approved its second stimulus package in a little more than a month, consisting of 880.3 billion yen ($10.74 billion) in spending.

Japanese shares saw choppy trading on Friday, rising, then falling, then rising again. The Nikkei Average has gained 6.1% so far in November, helped by speculation that next month's general election will result in the introduction of some radical policies to help the economy.

Exporters have performed particularly well over the past month after the prospect of more monetary-policy easing sent the yen down almost 3% in November.

Yen weakness re-emerged during Friday morning's stock session, with the dollar rising to  ¥82.34, up from  ¥82.11 in early action. Some currency-sensitive firms subsequently headed higher, with Honda Motor Co. (HMC) moving back from early losses of around 1% to trade up 0.3%, while Nikon Corp. (NINOF) gained 3.8%.

Elsewhere, Mitsubishi Heavy Industries Ltd. (7011.TO) climbed 1.6%, and Hitachi Ltd. (HIT) advanced 3.5%, after the firms said they will merge their thermal-power businesses and related units in a joint venture by 2014.

Hong Kong saw gains in the banking sector, with HSBC Holdings PLC up 1.1%, and Bank of Communications Co. (BCMXY) rising 1.3%.

Elsewhere in the Hong Kong financial sector, insurer Ping An Insurance Group Co. (PNGAY) climbed 1.3%, while China Life Insurance Co. (LFC) improved by 0.7%.

The Hong Kong benchmark has gained 1.8% so far this month, in contrast to the Shanghai Composite, which has dropped 5.1%, and the Shenzhen Composite, which is down nearly 12% so far in the month amid concerns over earnings.

"We believe China corporates will take a relatively long time to deleverage, which will dampen their long-term growth and lead to a tight liquidity environment," said strategists at Deutsche Bank on Friday.

"Also, the near-term earnings contributions from new policies are limited, which may not justify the current relative high valuation," they said.

It also downgraded Haitong Securities Co. to hold from buy, with the firm's shares dropping 1.6% in Hong Kong.

Hong Kong Exchanges & Clearing Ltd. (HKXCY) declined 0.8% after announcing a plan to raise 7.75 billion Hong Kong dollars ($1 billion) via a private placement to fund its acquisition of the London Metal Exchange.

In other Hong Kong market news, People's Insurance Co. Group of China -- commonly known as PICC -- was due to announce the pricing of its initial public offering Friday, ahead of a its Dec.7 trading debut.

PICC's listing is set to become the largest IPO for a Chinese state-owned company since 2010. The insurer indicated in marketing materials that it would price its shares in a range of 3.42- 4.03 Hong Kong dollars (44-52 U.S. cents), raising up to $3.6 billion.

Losses for exporters weighed on the South Korean market Friday, where Hyundai Motor Co. (HYMTF) edged down 0.2%, but chip maker SK Hynix Inc. (HXSCL) tumbled 3.2%.

The Kospi is up 1.2% so far in November, while Sydney's S&P/ASX 200 has declined 0.1% over the month so far.

In Australia on Friday, however, the benchmark garnered support from a strong performance in the mining sector, after metals advanced in New York trade on Thursday.

Of the majors, Rio Tinto Ltd. (RIO) climbed 3.2% after announcing cost plans on Thursday, while Fortescue Metals Group Ltd. (FSUMY) rose 1.2%.

Rare-earths group Lynas Corp. advanced 1.8% after announcing that it has started operating its processing plant in Malaysia.

Among Japanese resource shares, oil major JX Holdings Inc. (JXHGF) surged 2.3% after its refining unit said late Thursday that it plans to raise its December crude throughput by 14% compared to a year earlier. .

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