Asia stocks gain on stimulus hopes; Nikkei at new 7-year high

CNBC

25 September 2014 at 7:45 am

Asian equities were mostly higher on Thursday following a rally in global markets overnight amid hopes for additional monetary stimulus in China and Europe.

Reports overnight that Chinese President Xi Jinping is considering replacing the head of the central bank sparked expectations for looser monetary policy in the world's second-largest economy.

"A change of the guard at the People's Bank of China might mean a more aggressively loose monetary policy going forward to help counter-act the growth slowdown. But in China, it's tough to tell whether it's a monetary thing or power consolidation," said Chris Konstantinos, director of international portfolio management of Riverfront Investment Group.

Meanwhile, the euro (Unknown:EURBA=) fell to a new 14-month low after European Central Bank chief Mario Draghi repeated his commitment to use "additional unconventional instruments" to support economic growth during an interview with Lithuanian media on Thursday. His remarks follow Germany's disappointing Ifo business climate index on Wednesday and fueled expectations for more stimulus to be announced at the bank's October meeting.

Nikkei rallies 1.3%

Japan's benchmark Nikkei (Nihon Kenzai Shinbun: .N225) index closed at a fresh seven-year peak for the second time in a week, with exporters getting a boost from a weaker yen (Exchange:JPYUSD=). The currency traded at 109.1 per dollar, near Friday's six-year low of 109.45.

Mitsubishi Motors (Tokyo Stock Exchange: 7211.T-JP) and Fuji Heavy Industries (Tokyo Stock Exchange: 7270.T-JP) were among the top gainers, up 4 percent each.

Panasonic (Tokyo Stock Exchange: 6752.T-JP) rose 1.3 percent on news it will take a near 50 percent stake in Spanish auto-parts manufacturer Ficosa.

Shanghai 0.3% higher

China's benchmark Shanghai Composite (Shanghai Stock Exchange: .SSEC) rose to its highest levels since March 2013, extending gains into a third straight session.

Nuclear power-related shares were among the top gainers after the country's central planning agency said it planned to start four projects that would generate more nuclear power. SUFA Technology Industry rallied by the daily limit of 10 percent.

Insurers fell after S&P warning that an increase in exposure to shadow banking assets could hurt insurers. New China Life Insurance (Shanghai Stock Exchange: 1336-SZ) and Ping An Insurance (Shanghai Stock Exchange: 1318-SZ) dropped 1 percent each.

ASX up 0.1%

Australia's benchmark S&P ASX 200 (^AXJO) index rebounded after closing down 0.7 percent on Wednesday. Speaking at the Melbourne Economic Forum, central bank governor Glenn Stevens said he was open to adopting macro-prudential tools and repeated his concerns about lending standards for housing investors.

"After the release of an interesting financial stability report and the board's concerns around property investment and unbalanced lending, there are signs Stevens might need to break his mantra around macro-prudentials and increase regulation,," said Evan Lucas, market strategist at IG.

Global miner BHP Billiton (London Stock Exchange: BLT-GB) added 0.3 percent after announcing that it is considering listing a planned spin-off company in London.

Kospi flat

South Korean shares erased earlier gains after breaching the 2,040 level for the first time this week.

Hyundai Motor (Korea Stock Exchange: 538-KR) fell over 1 percent as its labor strike continued with around 40,000 workers planning to walk off the job again on Thursday.

Nifty drops 1.1%

Indian shares fell while the rupee (Exchange:INR=) hovered near the previous session's one-week lows on fears of higher coal imports following a court's decision to block extraction permits.