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Asia follows Wall St gains, brace for return of China markets

Asian stocks rose modestly on Thursday, taking their cue from gains on Wall Street as the region braced for a resumption of trading in the Chinese markets after a week-long break.

[TOKYO] Asian stocks rose modestly on Thursday, taking their cue from gains on Wall Street as the region braced for a resumption of trading in the Chinese markets after a week-long break.

MSCI's broadest index of Asia-Pacific shares outside Japan tacked on 0.3 per cent, supported by South Korea's Kospi rising 0.5 per cent and Australian shares climbing 0.9 per cent. Japan's Nikkei bucked the trend and lost 0.2 per cent on a stronger yen.

Overnight on Wall Street, the S&P 500 soared to a 3-week high thanks to a bounce in biotechnology companies. Materials shares also enjoyed a positive session on the back of gains for precious metals.

Chinese stock markets, which have been hit by wild swings in recent months due to growth and policy worries, re-open later in the session after shutting since the end of September for holidays. "Arguably, two of the most important developments since China's holiday began is the weakness in the US employment data and, leaving aside the UK, output of the major economies appeared to slow in August," wrote Marc Chandler, global head of currency strategy at Brown Brothers Harriman. "Although many market participants have shifted their expectations of a Fed hike out to March 2016, many Fed officials themselves continue to signal the likelihood of a rate hike before the end of the year." The Fed opted not to hike rates in September in the wake of cooling global growth, and fears of a deepening slowdown in China. Last week's soft non-farm employment report prompted markets to scale back expectations that the Fed would hike rates later this year.

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Investors will have an opportunity to gauge the thinking of US central bank officials when the minutes of the Fed's September meeting, at which it opted not to hike rates, are released later in the day.

St. Louis Fed President James Bullard, Minneapolis Fed President Narayana Kocherlakota and San Francisco Fed President John Williams will also speak later on Thursday.

The dollar has wobbled since the weak US jobs data lessened the prospects of a near-term Fed rate hike. It was on track to post its third straight day of losses against the yen, which received a fresh lift on Wednesday after the Bank of Japan kept monetary policy steady.

The greenback dipped 0.1 per cent to 119.97 yen, having drifted down from the week's high of 120.575 struck on Tuesday.

The euro was steady at US$1.1238 after losing about 0.3 per cent overnight on weaker-than-expected German industrial production data.

In contrast, upbeat British industrial output data boosted the Sterling, which hovered near a 2-week high of US$1.5340 hit the previous day.

Commodity currencies like the Australian and Canadian dollars also remained in good heart against the greenback, as the turn in Fed policy expectations drove up global risk appetite and prices of commodities like crude.

The Aussie traded at US$0.7195 after reaching a near 3-week high of US$0.7235 overnight. The currency got some support after the Reserve Bank of Australia left rates steady earlier this week and struck a less dovish tone than some had expected.

Crude resumed their rise after a US government report showing a large inventory build briefly halted its rally. US crude was up 0.9 per cent at US$48.22 a barrel, edging back towards a 2-1/2 week high of US$49.71 struck on Wednesday.