Japan's Nikkei share average rose 2 percent on Thursday to its highest close in more than a week as hopes that a Chinese interest rate cut would help China's economy bolstered shippers, steel and construction machinery makers such as Komatsu Ltd.
High tech shares such as Kyocera Corp climbed in the wake of gains by their US peers, though Panasonic Corp bucked the trend by falling more than 4 percent after a source said it would slash its profit forecast, which it did after the close.
Additional upward impetus came from trading firms and other commodities-linked shares, partly on hopes for China and partly on oil prices, which rose more than 7 percent on Wednesday. But the yen's rise against the dollar was paring gains for exporters, keeping the market weighted.
The benchmark Nikkei gained 160.17 points to 8,373.39 in extremely thin trade, with many investors sidelined. The broader Topix gained 1.5 percent to 829.03. Trade was very thin with US markets closed on Thursday for the Thanksgiving holiday, and market players said the gains on China expectations were likely to be brief at best.
"When China announced its recent economic package, construction machinery, steel and shippers all gained, just the way they have now," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.
"As to whether the rate cut has avoided the worst for China's economy - well, at least it is better than nothing." On Wednesday, China cut interest rates by the biggest margin in 11 years, and the European Union plotted a 200 billion euro ($257.6 billion) stimulus plan as central banks and governments acted to jolt the world out of a deepening slowdown.
Others said investors were waiting to see if US shoppers flock to stores on Friday, traditionally the start of the Christmas shopping season, or if they are tightening their purse strings this year as the economy worsens. More gloomy US data was released on Wednesday, including government reports that showed orders for costly manufactured goods such as refrigerators and washing machines, known as durable goods, plummeted in October, while consumers cut spending at the steepest rate in more than seven years.
"The boost from the China rate cut is unlikely to continue, since the market's real attention is on the United States," said Katsuhiko Kodama, senior strategist at Toyo Securities.
"People remain cautious since we need to watch the Christmas sales season this year." Market players said they detected no immediate impact from attacks by gunmen in Mumbai in which at least 100 people were killed, noting that shares in firms with strong links to the India market such as Suzuki Motor Corp were up.
Panasonic fell 4.7 percent to 1,284 yen after a source familiar with the matter said it was likely to cut its annual operating profit forecast by 30 percent or more as a slowing economy depressed sales of flat TVs and other electronics products.
After the close, Panasonic cut its forecast a deeper 39 percent, hit by a slowing economy and a firmer yen, below market expectations. Mitsui O.S.K. Lines and other shipping companies rose, with bargain-hunting by investors eager to snap up shares in the beaten-down sector joining expectations for China to provide a boost.
Mitsui O.S.K. jumped 7.4 percent to 478 yen, while Nippon Yusen, Japan's largest shipping firm, rose 6.5 percent to 491 yen. Kawasaki Kisen rose 5.2 percent to 365 yen. Oil and gas field developer Inpex climbed after oil surged on Wednesday and remained strong even though crude prices fell back a bit, rising 10 percent to 573,000 yen.