Asian modestly higher ahead of Japan rate decision (AP) (18-12-2008)

HONG KONG (AP) -- Asian stock markets were a touch higher on Thursday as expectations grew that Japan would soon cut interest rates to support its contracting economy and crude oil prices sank to 4 1/2-year lows.

Trading was thin and uneven trade after Wall Street stocks fell overnight as early enthusiasm about the Federal Reserve's historic rate cut gave way to concerns that a turnaround in the U.S. economy was still far off.

In Tokyo, the Nikkei 225 stock average climbed 54.71 points, or 0.6 percent, to 8,667.23 after flitting in and out of negative territory in morning trading. Hong Kong's Hang Seng Index recovered near the end of the session to add 0.2 percent to 15,497.81.

Benchmarks in Australia, South Korea, Singapore and mainland China also advanced.

The dollar recovered slightly from 13-year lows against the yen but continued to slide against the euro.

Asia's markets have shown surprising strength since rebounding from last month's sell-off, though some analysts were skeptical that the upswing would last.

The U.S. rate cut has raised expectations the Bank of Japan will follow suit and slash its key rate to nearly zero when it wraps up a two-day meeting Friday. Goldman Sachs predicts the bank will shave its overnight call rate target from the current 0.3 percent to 0.15 percent, while JP Morgan forecasts a cut to 0.1 percent.

Financials gained on the speculation, with Mizuho Financial Group Inc. jumping 8.1 percent and Sumitomo Mitsui Financial Group Inc. gaining 8.5 percent.

Meanwhile, Honda dropped 3.4 percent a day after Japan's No. 2 carmaker said it was slashing its annual profit forecast due to the global slowdown.

Energy firms took a beating on crumbling crude prices. Chinese upstream oil producer CNOOC Inc. and Australia's Woodside Petroleum both dived more than 6 percent.

Source: AP