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Asia: Stocks rise from one-month low as Japanese equities rally

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[SINGAPORE] Asian stocks rebounded from a one-month low as Japanese shares advanced after a report the government may delay a planned sales tax increase.

The MSCI Asia Pacific Index climbed 0.4 per cent to 126.24 as of 11:04 am in Tokyo. Japan's Topix index jumped 0.7 per cent after the Nikkei reported on Saturday that Prime Minister Shinzo Abe will postpone a two-percentage point boost to the sales tax and will probably make his decision public after the G-7 summit at the end of this month.

Chinese retail sales, industrial production and fixed-asset investment data released on Saturday missed economist estimates.

"Any delay on the sales tax hike in Japan would be bullish for equities," James Woods, a strategist at Rivkin Securities in Sydney, said by phone.

"Disappointing data out of China highlights the challenges that are facing policy makers."

Mr Abe will postpone raising the levy to 10 per cent after judging it will threaten efforts to pull Japan out of deflation, the Nikkei reported. It was scheduled to take place in April, the newspaper said.

That would be the second time Mr Abe has delayed the increase. Tomomi Inada, Japan's policy chief, denied the report on public broadcaster NHK. Mr Abe has repeatedly said that a previous tax increase to 8 per cent from 5 per cent in 2014 hurt spending more than his government expected.

"It's possible this news of a tax hike delay could entice foreigners to close their short positions," said Yoshinori Ogawa, a market strategist at Okasan Securities Co in Tokyo.

Japan will report gross domestic product on Wednesday, and economists are predicting the figures will show the country narrowly avoided falling into a recession in the first quarter.

Poor steel and coal output dragged on industrial production in China, which increased 6 per cent from a year earlier versus economists' forecasts of 6.5 per cent.

Retail and investment readings also disappointed, according to the reports on Saturday. A day earlier, data showed a slump in new credit last month. China's central bank moved to reassure investors that monetary policy would continue to support the economy, with a statement Saturday that sought to explain the slump in new loans.

The Shanghai Composite Index slipped 0.5 per cent, extending four weeks of losses. The Hong Kong Hang Seng Index gained 0.2 per cent while a measure of mainland shares traded in the city dropped 0.4 per cent.

South Korea's Kospi index lost 0.1 per cent. Australia's S&P/ASX 200 Index climbed 0.5 per cent. New Zealand's S&P/NZX 50 Index was little changed.

Futures on the S&P 500 Index were little changed. The US equity benchmark index dropped 0.9 per cent on Friday, posting the longest streak of weekly losses since January, after disastrous reports from Macy's Inc to Nordstrom Inc sent retail shares tumbling.

BLOOMBERG