Asia: Stocks advance on China optimism as Japan shares rebound

[TOKYO] Asian stocks rose, extending a global rally, amid optimism that Chinese policy makers will succeed in stabilising mainland equity markets. Japanese shares rebounded to push the Nikkei 225 Stock Average back into positive territory for the year.

The MSCI Asia Pacific Index climbed 1.2 per cent to 125.64 as of 9:03 am in Tokyo as the Nikkei 225 surged 3.4 per cent. US investors returned from a long weekend to the first gains in mainland Chinese stocks for five trading days, with shares soaring in late afternoon trade in a pattern that's associated with state buying. The Federal Reserve remains in focus, with traders counting down to next week's meeting of the US central bank.

"China seems to be the big driver at the moment," Chris Weston, chief markets strategist in Melbourne at IG Ltd, said by phone. "As long as China is stable and equity markets there aren't in freefall, markets will generally go higher. We won't rule out more volatility ahead of the US meeting next week." Japan's broader Topix index added 3.3 per cent. South Korea's Kospi index advanced 1.4 per cent. Australia's S&P/ASX 200 Index climbed 0.5 per cent and New Zealand's NZX 50 Index rose 0.8 per cent. Futures on Hong Kong's Hang Seng Index climbed 1.1 per cent in most recent trading. Markets in China and Hong Kong have yet to open.

China's government spent US$236 billion from June through August trying to shore up stocks, according to Goldman Sachs Group Inc. The Shanghai Composite Index surged 2.9 per cent Tuesday, after losing 4.7 per cent in the prior four days.

E-mini futures on the Standard & Poor's 500 Index added 0.1 per cent. The underlying US equity benchmark index jumped 2.5 per cent on Tuesday.

BLOOMBERG