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Asia: Stocks rise; Tokyo boosted by weak yen

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[HONG KONG] Tokyo led most Asia markets higher Tuesday as exporters were lifted by a weakening yen, while tighter Chinese inflation data also provided support.

However, gains were tempered by losses in energy firms after a slump in crude prices as the wildfires sweeping Canada's oil-sands region abated.

Japanese stocks advanced for a second day as the dollar made up more ground against the yen after Friday's US jobs report provided hope for the economy but was weak enough to suggest any Federal Reserve interest rate hike would be gradual.

The Nikkei index ended the morning 1.5 per cent higher as the dollar climbed to 108.70 yen, up from 108.34 yen in New York and sharply higher than the 105.50-yen troughs touched last Tuesday.

Toshihiko Matsuno, chief strategist at SMBC Friend Securities, told Bloomberg News: "We're more likely to see a weakening yen this week. The Japanese currency has fallen to within the levels assumed for it by exporters, so investors will be able to buy the shares again."

Shanghai reversed early losses to rise 0.10 per cent after inflation came in above two per cent again last month while the fall in prices paid at factory gates also eased.

The figures provided some small hope for the world's number two economy after weekend data showed another fall in exports and imports.

"We are witnessing a reversal of the deflation process," Larry Hu, head of China economics at Macquarie Securities Ltd. in Hong Kong, wrote in a recent note. "While deflation is very painful, the reversal of it could also lead to higher nominal growth and inventory restocking."

Among other markets, Sydney was up 0.1 per cent and Seoul added 0.4 per cent. However, Hong Kong slipped 0.3 per cent.

Hopes that European leaders will agree to a deal to release fresh bailout cash to Greece provided some cheer after Greece's parliament voted for more pension cuts and tax hikes.

However, regional energy firms retreated with oil prices as the biggest threat to Canada's reserves seemed to be over with rain and cooler temperatures slowing fires that have raged for more than a week. The news allowed traders to turn their attention back to the ongoing global supply glut.

The Brent crude contract was down 0.1 per cent in Asia having lost almost four per cent Monday while West Texas Intermediate shed 0.4 per cent, extending near three per cent losses.

Hong Kong-listed CNOOC fell 1.6 per cent and PetroChina was off 1.7 per cent while Inpex in Tokyo fell 0.5 per cent and JX Holdings was 0.8 per cent lower.

Manila's stock market fell 0.5 per cent after anti-establishment politician Rodrigo Duterte claimed victory as the new president of the Philippines after a profanity-laden campaign that included threats to impose one-man rule if lawmakers disobeyed him and promises to embrace communist rebels.

Philippine shares have fallen more than five per cent over the past six weeks as Mr Duterte looked set for victory with traders concerned about his economic plans.

REUTERS