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Asia stocks rise on global policy hopes

MUMBAI (MarketWatch) -- Asian stock markets rose Wednesday, as investors weighed the chances of global policy action with worries about developments in Europe in the run-up to this weekend's election in Greece.

Japan's Nikkei Stock Average (100000018) rose 0.6%, the Shanghai Composite Index (000001) edged up 1.3%, and Hong Kong's Hang Seng Index (HSI) gained 0.8%.

South Korea's Kospi (SEU) rose 0.3%, while Australia's S&P/ASX 200 index (XJO) edged down 0.2%.

"Choppy range-trading appears the name of the game as we approach the back end of a week which is laden with a number of data and event risks, foremost being the Greek election," said Sue Trinh, strategist at RBC Capital Markets.

Among decliners, Hong-Kong-listed apparel firm Esprit (330) (ESHDF) plummeted 21.8% after the firm announced that its Chief Executive Officer Ronald van der Vis would resign for personal reasons, effective July 1.

The resignation was the latest event in what's been a rough period for the Europe-exposed retailer. Last September, Esprit reported a 98% drop in fiscal-year profit and said it would invest heavily to reinvigorate itself, while declaring it had "lost its soul."

In Tokyo, Canon Inc. (7751) (CAJ) fell 1.1% after Credit Suisse cut its price target for the shares.

Banks were weighing in Australia, with investment bank Macquarie Group Ltd. (MQG) (MQBKY) down 1.9%, and retail bank Australia & New Zealand Banking Group Ltd. (ANZ) (ANEWF) lower by 1.3%.

The week has proved to be a volatile one so far for global stock markets grappling with last weekend's Spanish bank bailout ahead of Sunday's crucial elections in Greece.

In an illustration of just how concerned investors are about the prospects for Europe, Spanish government bond yields reached a record high on Tuesday. Read more on Spanish bonds.

But, at the same time as fears about European developments have deepened, hopes for stimulus to counter those concerns have gained traction.

"Markets are keenly anticipating decisive action from key policy meetings in June," said Michael Hartnett, chief global equity strategist at BofA Merrill Lynch Global Research.

Sources of hope for such possible action include the U.S. Federal Reserve. On Tuesday, Chicago Fed President Charles Evans said the central bank would be in favor of moves to spur more rapid jobs growth.

Optimism that policy makers would step in to limit the fallout from Europe to the global economy helped gold and oil futures gain Tuesday, along with U.S. stocks, and gave a boost to commodity-related shares in Asia.

Gainers in the sector included Sumitomo Metal Industries Ltd. (5405) (SMMLF) , up 2.5%, and Toho Zinc Co. (5707) , higher by 2.1% in Japan.

Australian iron-ore miner Fortescue Metals Group Ltd. (FMG) (FSUMF) rose 2.9% after signing a deal to consolidate its magnetite interests with China's Baoshan Iron & Steel Co. (600019) , which was trading flat in Shanghai.

Oil giant CNOOC Ltd. (883) (CEO) fell 1% in Hong Kong, as benchmark U.S. crude-oil futures pared gains in Asian morning trade.

Japanese machinery stocks got a mild boost from April data showing core machinery orders rose a stronger-than-expected 5.7% in the month, with Fanuc Corp. (6954) (FANUF) up 0.4% and Denso Corp. (6902) (DNZOY) higher by 0.9%.

"The series is very volatile and we would not read too much into monthly movements," said David Rea at Capital Economics. Read more on Japan machinery-order data.

The Japanese market also benefitted from a strong rebound for shares of heavyweight Fast Retailing Co. (9983) (FRCOY) . The stock rose 1.8% Wednesday to pare month-to-date losses to 11.6%.

Prada SpA(1913) (PRDSY) shares jumped 4.8%.

HSBC reiterated its overweight stance on the firm and raised its target price to HK$62 from HK$53 saying "strong sales at Prada seem to be flowing unconstrained to the bottom line."