Asia stocks gain on EU bailout hopes; Nikkei up 0.4%

Investing.com – Asian stock markets advanced on Wednesday, after an unconfirmed report said that France and Germany had agreed to expand the euro zone’s bailout fund, overshadowing a downgrade to Spain’s credit rating.  

During late Asian trade, Hong Kong's Hang Seng Index jumped 1.5%, Australia’s ASX/200 Index rose 0.65%, while Japan’s Nikkei 225 Index added 0.4%.

The Guardian reported late Tuesday that France and Germany had agreed to add EUR2 trillion to the European Financial Stability Facility, with the move to be announced this weekend, citing unidentified European Union diplomats.

The report helped boost shares in the financial sector, even after sources with direct knowledge of the negations said no deal had been reached.

Japan’s largest lender Mitsubishi UFJ Financial Group saw shares climb 1.1%, while Shinsei Bank shares jumped 3.4%.

Losses in Japanese exporters limited gains after ratings agency Moody’s cut Spain’s credit rating by two notches to A1 from Aa2, with the outlook remaining negative.

Shares of consumer electronics giant Sony slumped 1.2%, automaker Nissan retreated 1.1%, while Mazda shares dropped 3.65% after saying it will halt all production at its Thailand factories until October 22 due to flooding.  

In Hong Kong, lenders and property developers led gains, rebounding from the previous day’s rout.

China’s largest lender Industrial and Commercial Bank of China saw shares gain 2.5%, China Construction Bank shares rose 2.1%, while Hong Kong-listed shares of Europe’s biggest bank HSBC Holdings advanced 1.95%.

Meanwhile, shares in Hong Kong’s largest property developer Sino Land Company jumped 2.5%, while rival Sun Hung Kai Properties added 1.9%, while property investment firm Hutchison jumped 4.5%.

Elsewhere, Australian lenders performed strongly after Reserve Bank of Australia Assistant Governor Guy Debelle said earlier that the nation’s banks are being shielded from the effects of the euro zone’s debt crisis by rising domestic deposits and demand for their debt by U.S. funds.

National Australia Bank shares advanced 1.55%, while rivals Westpac Banking Group and Commonwealth Bank of Australia added 1.3% and 1.2% respectively.

Meanwhile, the outlook for European stock markets was downbeat. The EURO STOXX 50 futures pointed to a loss of 0.3%, France’s CAC 40 futures dropped 1.05%, the FTSE 100 futures shed 0.6%, while Germany's DAX futures pointed to a loss of 1.3%.

Later in the day, the U.S. was to publish government report on building permits and housing starts as well as official data on consumer price inflation.