Asian shares jumped on Thursday, buoyed by strong US earnings and global recovery hopes after China's economy grew faster than forecast in the second quarter.
Asian shares across the region rose 1.8 per cent to their highest since mid-June.
Japan's benchmark Nikkei outperformed with gains of 2.2 per cent to 9,475.04, its highest in a week, as high-tech exporters climbed with the additional boost of the weaker yen.
But markets were keeping a wary eye on the fate of CIT Group Inc a US lender to thousands of small and mid-sized businesses, after bail-out talks with the government ended, a move that could ultimately drive it to bankruptcy.
US stocks surged 3 per cent or more on Wednesday, with the S&P 500 racking up its three best days since March, after results from bellwether Intel beat expectations to lift hopes for a rebound in technology spending and improved corporate profitability.
"Added to hopes for a recovery in US corporate earnings, investors are generally welcoming growing signs of a recovery in US economic data," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities in Tokyo.
China said its second quarter gross domestic product rose 7.9 per cent against the previous year, beating expectations for a 7.5 per cent rise, while its first half GDP rose 7.1 per cent against a year earlier.
Optimism was reinforced in the United States by manufacturing data that suggested the recession is abating, as well as minutes from the Federal Reserve's most recent policy-setting meeting that showed officials judged that the US economy's contraction was slowing.
Mazda Motor surged 8.9 per cent after the Nikkei business daily said Toyota Motor planned to supply core components for hybrid vehicles to smaller rival Mazda. Toyota climbed 2.9 per cent.
Japanese manufacturer confidence improved for the four month in a row as exports and industrial output picked up, a Reuters poll showed, but the mood among service sector firms sagged as domestic demand remained limp.
Some traders said the news about CIT gave investors an excuse to take some profits on yen crosses.
The Australian dollar slipped 0.7 per cent to 75.19 yen and the New Zealand dollar dipped 0.6 per cent to 60.77 yen.
"If share prices were to fall because of (CIT), we could see moves that are opposite from what occurred yesterday and see some buying back of the yen," said Tohru Sasaki, chief foreign exchange strategist at JPMorgan Chase Bank in Tokyo.
Reuters
