HONG KONG, Dec 21, 2007 (AFP) - Asian stocks regained their composure and closed sharply higher on Friday after mild gains were registered on Wall Street overnight and with investors squaring off ahead of the year-end.

Recent sharp falls - amid fears of a sharp economic downturn in the United States and the prospect of no further US interest rate cuts over the short term - appeared to have settled and this resulted in some bargain hunting.

Tokyo was among the best on the day with a 1.50 percent gain, Seoul was up 1.8 percent, Taipei rose 1.07 percent, Sydney advanced 1.1 percent, Wellington was 1.16 percent higher and Manila gained 1.2 percent.

Jakarta and Mumbai were closed for public holidays.

TOKYO: Japanese share prices rebounded 1.5 percent as bargain hunters waded into the market after the key Nikkei index dipped briefly below the key 15,000 points level. Dealers said sentiment was boosted by a report of a tie-up between electronics giants Toshiba and Sharp in liquid crystal displays (LCDs).

The Nikkei-225 index ended up 225.40 points at 15,257.00. Volume rose to 1.98 billion shares from 1.67 billion on Thursday. Shares slipped briefly into negative territory in early deals as investors squared positions ahead of a long weekend, but the market rebounded after the Nikkei fell below 15,000 points for the first time since November 27.

"Investors were active buyers when the Nikkei index fell to around the 15,000 support line," said Yumi Nishimura, manager of equity marketing at Daiwa Securities SMBC.

But she said investors may not be willing to keep chasing shares higher.  

HONG KONG: Hong Kong share prices closed 2.26 percent higher led by the property sector as housing sales are expected to remain strong next year.

Dealers said investors shrugged off China's latest interest rate hike as the move had been well anticipated, while also noting that the increase in the key lending rate was milder than expected.

China's central bank announced Thursday that it is raising the benchmark one-year lending rate by 18 basis points and the one-year deposit rate by 27 basis points, in its sixth rate hike this year.

Turnover remained low ahead of holidays. The market will have a half-day session on Monday and will be shut on Tuesday and Wednesday for Christmas.

The Hang Seng index closed up 609.83 points at 27,626.92, off a low of 27,192.80 and a high of 27,670.31. Turnover was 83.37 billion Hong Kong dollars (10.70 billion US). For the week, the index was up 63 points or 0.23 percent.

"Scores of investors were speculating that the US Federal Reserve will cut interest rates further as the US subprime mess continues to take its toll on major banks and causes worries over the state of the economy," said Peter Lai, sales director at DBS Vickers.  

SYDNEY: Australian share prices ended a seven-day losing streak to close up 1.1 percent, with major banks leading the way on speculation a Chinese government agency had bought stakes in them.

The S&P/ASX 200 closed up 70.1 points at 6,247.0. Turnover was 1.69 billion shares worth 10.59 billion dollars (9.08 billion US). Dealers said shares closed sharply higher on talk that China's State Administration of Foreign Exchange had bought stakes in major banks, including Australia & New Zealand Banking Group.

"It makes sense that the Chinese are investing in the banks. They have the surplus funds and our banks have strong fundamentals," said Marcus Mueller, a director at brokerage Reynolds & Co. Mueller said the recent sell-off prompted by the country's second biggest shopping centre owner Centro Properties' woes, triggered by the credit crunch produced by the US subprime mortgage market crisis, was an over-reaction.

SHANGHAI: Chinese share prices closed 1.15 percent higher, led by airlines and metal companies, with investors shrugging off the latest interest rate hike.

Dealers said that investors had already factored in the rate hike and continued to build their positions amid bargain-hunting. The Shanghai Composite Index closed up 58.24 points to 5,101.78 on turnover of 103.48 billion yuan (13.80 billion dollars).

China's central bank announced late Thursday its sixth interest rate hike this year, the government's latest move to slow rising inflation and cool an economy that is growing at double-digit pace.

The hike, which took effect on Friday, raised deposit rates 27 basis points and the lending rate by 18 basis points.

"The interest rate hike didn?t impact the market because it was within expectations while some investors may also regard it as the end of negative news for this year," said Mo Fan, an analyst with Soochow Securities.  

TAIPEI: Taiwan share prices closed 1.07 percent higher, with sentiment buoyed by Wall Street's firmer tone overnight.

The weighted index closed up 84.36 points at 7,941.44, on turnover of 100.44 billion Taiwan dollars (3.09 billion US). While margin call pressure briefly dragged down the index in early trade, bargain hunters focusing on bellwether technology stocks pushed it to a firmer close, dealers said.

They said the Taiwan central bank's decision to raise key interest rates by 12.5 basis points from Friday was in line with expectations and had little impact on the market. Alvin Teng, an assistant vice president at SinoPac Securities Co, credited the recovery to valuation buying, saying lingering economic and political concerns may extend volatility into next week.

 SEOUL: South Korean share prices closed 1.8 percent higher after a volatile session, with banks leading the rebound on hopes that ownership restrictions will be eased under the new government. President-elect Lee Myung-Bak suggested during his campaign that he would allow local industrial or business conglomerates to acquire majority stakes in banks to ease the privatisation of the sector.

The KOSPI index ended 33.95 points higher at 1,878.32. Trading was thin, with 351 million shares worth 5.4 trillion won (5.7 billion dollars) changing hands.

After moving listlessly in the morning, the market advanced later in the session as foreign investors stepped up their futures purchases, triggering programme-buying for large-cap blue chips.

"Banks outperformed today as hopes for faster privatisation and a better earnings outlook sparked bargain-hunting interest in the sector," said Daewoo Securities analyst Kim Seong-Ju.

SINGAPORE: Singapore share prices closed 1.21 percent higher as investors sought out bargains after a recent selloff. Dealers said volume was light ahead of the holiday period. The Straits Times Index closed up 40.76 points at 3,398.10 on volume of 1.50 billion shares worth 1.97 billion dollars (1.35 billion US).

"With a firmer US market, local sentiment has improved," Westcomb Securities said in a note to clients.  

KUALA LUMPUR: Malaysian share prices closed up 1.2 percent due to gains in key blue chips, but trading volumes were thin ahead of the year-end holidays. Dealers said plantations stocks led gainers amid reports the monsoon season that brought flooding in major palm oil producing states will hurt production. Ang Kok Heng, chief investment officer of Phillip Capital Management said investor confidence had improved after major central banks implemented a rescue plan aimed at easing the global credit crunch.

"Going forward, we will still have to look at the developments in the US credit market," he said. The composite index was up 16.35 points at 1,403.56. Volume was 636.24 million shares, valued at 1.4 billion ringgit (418 million dollars).

BANGKOK: Thai share prices closed 2.76 percent higher, lifted by steady gains across the region and a sharp rise in local energy-linked stocks.

Dealers said investors were also upbeat that Sunday's election, the first since last year's bloodless coup ousting premier Thaksin Shinawatra, would go smoothly.

The composite index rose 21.89 points to 813.60 on turnover of 1.8 billion shares worth 13.1 billion baht (388 million dollars).

"The market was supported by strong gains in the region, including Japan, South Korea and Hong Kong," said Chai Chirasevenupraphand, a market strategist at Capital Nomura Securities.

Investors bought back energy-related stocks, which were sold heavily during the week as they were worried over a deal between the army-backed government and energy giant PTT, the largest stock on the Thai bourse.  

JAKARTA: Closed.  

MANILA: Philippine shares closed 1.2 percent higher a day after the central bank trimmed its key interest rates to slow the peso's rise against the dollar.

Dealers said year-end selective buying by fund managers of issues with promising 2008 profit prospects also boosted stocks, but trading was generally subdued ahead of the four-day Christmas break. The composite index rose 41.02 points to 3,532.98. A total of 13.1 billion shares worth 2.8 billion pesos (67.15 million dollars) changed hands.

"The (25 basis-point) rate cut was comfortably used as a catalyst since this lowers the cost of money, while providing investors with a short-term buying opportunity," said Jose Vistan of AB Capital Securities.  

WELLINGTON: New Zealand share prices rose 1.16 percent, as investors welcomed gains in offshore markets.

The NZX-50 index rose 45.95 points to close at 3,993.51 on turnover worth 134.2 million dollars (102.4 million US). "It's been quite a positive day on the market today, mainly in reaction to firmer offshore markets," said Hamilton Hindin Greene partner Grant Williamson.

"We are starting to see some investor interest return to the market, mainly on bargain hunting as investors start to pick up a few stocks which have been languishing somewhat for a while now."

MUMBAI: Closed.