HONG KONG, Dec 18, 2008 (AFP) - Asian stocks saw modest gains on Thursday as investors watched out for interest rate cuts, with Japan looking poised to slash its rate near zero to tackle a sharp economic downturn, dealers said.

Tokyo rose 0.64 percent, Hong Kong 0.2 percent and Sydney 0.3 percent.

The Bank of Japan on Thursday opened a two-day meeting which could cut interest rates down from the already low 0.3 percent.

The US Federal Reserve on Tuesday slashed its benchmark rate to virtually zero, sending the dollar plunging against the yen.

"If the BoJ does not lower rates it will be a catastrophe. While a rate cut will not bring down the yen that much, the impact will be greater if it fails to do anything," said Societe Generale's forex head Yuji Saito.

Japanese officials have hinted at a possible intervention in currency markets. "We think that we need an appropriate and timely response," Chief Cabinet Secretary Takeo Kawamura told a news conference.

The dollar was trading Thursday in the 87 yen range, the Japanese currency's strongest level in 13 years.

"The downward pressure on the dollar/yen won't ease unless a forex intervention is undertaken," Takero Inaizumi, head of the equities department of Mizuho Investors Securities, told Dow Jones Newswires.

In Shanghai, market speculation that Beijing may cut interest rates and reduce banks' reserve requirement ratio in the near term triggered a late rally in financial firms, dealers said.

"Sentiment improved in the afternoon session amid market talk about an aggressive cut in the interest rate or bank reserve ratio to increase money supply," said Wang Xiaoli, an analyst at Orient Securities.

In Mumbai, Indian shares closed near a five-week high above the key 10,000 points level on hopes that India's central bank could cut rates as annual inflation eased to a nine-month low, dealers said.

Caution reined elsewhere.

"We're not seeing much action in the market" in the Philippines, where stocks were down 0.17 percent, Lawrence de Leon of Accord Capital Equities said. "Investors know the global economy is still in trouble."

TOKYO: Japanese share prices closed 0.64 percent higher.

The Tokyo Stock Exchange's benchmark Nikkei-225 index rose 54.71 points to close at 8,667.23.

The broader Topix index of all first-section shares gained 0.23 points or 0.03 percent to finish at 838.69.

Mizuho Financial Group jumped 8.1 percent to 256,800 yen, while Sumitomo Mitsui Financial Group soared 8.5 percent to 384,000 yen.

Real estate firm Mitsui Fudosan rose 4.3 percent to 1,400 yen.

Toyota Motor Corp. ended down 2.3 percent at 2,960 yen. Honda Motor Co. lost 3.5 percent to 1,825 yen after drastically cutting its earnings outlook for the year.

HONG KONG: Shares closed 0.2 percent higher.

The benchmark Hang Seng Index rose 37.29 points to 15,497.81 on turnover worth 52.26 billion Hong Kong dollars (6.75 billion US).

Among locally listed Chinese property developers, Guangzhou R&F rose 13.2 percent to 8.86 dollars and Shui On Land surged 11.3 percent to 2.67 dollars.

Blue-chip developer Sino Land surged 9.3 percent to 8.85 dollars, Wharf Holdings jumped 8.3 percent to 21.65 dollars and Sun Hung Kai Properties rose 3.3 percent to 70.95 dollars.

HSBC bank dropped 3.4 percent to 81.60 dollars.

SYDNEY: Australian share prices closed up 0.3 percent.

The benchmark S&P/ASX200 rose 10.6 points to 3,581.2, while the broader All Ordinaries was up 6.7 points at 3,521.7.

A total of 2.49 billion shares worth 9.7 billion dollars (6.8 billion US) was traded.

Commonwealth Bank of Australia closed down 9.1 percent at 26.50. Among other major banks, ANZ rose 4.2 percent to 14.27, National Australia Bank gained 2.6 percent to 19.82 and Westpac was up 1.4 percent at 15.94.

Miner BHP Billiton rose 0.2 percent to 31.00.

In the energy sector, Woodside lost 6.08 percent to 33.81, Santos dropped 3.75 percent to 14.10 and Oil Search fell or 4.87 percent to 4.49.

Qantas airlines gained 7.5 percent to 2.43.

SHANGHAI: Chinese shares closed up 1.97 percent.

The benchmark Shanghai Composite Index rose 38.88 points to 2,015.69 on turnover of 64.9 billion yuan (9.5 billion dollars).

Among property developers, China Vanke rose 3.0 percent to 7.81 yuan and Beijing North Star closed up 2.7 percent at 3.43 yuan.

Banks surged in afternoon trading amid speculation of more stimulus measures such as an interest rate cut. Industrial and Commercial Bank of China closed up 2.1 percent to 3.86 yuan.

Shanghai Pudong Development Bank soared 7.5 percent to 14.83 yuan and China Merchants Bank added 5.8 percent to 13.66 yuan.

TAIPEI: Taiwan shares closed 1.01 percent higher.

The weighted index rose 46.79 points to 4,694.81 on turnover of 62.11 billion Taiwan dollars (1.90 billion US).

Taiwan Semiconductor Manufacturing Co, the world's leading contract microchip maker, fell 2.17 percent to 45.00 dollars while rival United Microelectronics Corp lost 1.28 percent to 7.72.

SEOUL: South Korean shares closed 0.53 percent higher.

The KOSPI ended up 6.16 points at 1,175.91. Volume was 550.13 million shares worth 5.82 trillion won (4.5 billion dollars).

Hynix Semiconductor rose 12.4 percent to 8,130 won while Samsung Electronics rose 1.9 percent to 468,000.

POSCO rose 0.3 percent to 392,500 won.

LG Display fell 2.3 percent to 23,450 won after announcing production cuts.

KB Financial Group ended flat at 35,250 won while Woori Finance Holdings fell 2.3 percent to 7,520. Shinhan Financial Group dropped 3.9 percent to 32,100 and Hana Financial Group lost 1.8 percent to 21,500.

SINGAPORE: Singapore shares closed 1.10 percent higher.

The blue-chip Straits Times Index closed up 19.66 points at 1,798.95 on volume of 891 million shares worth 832 million dollars (580 million US).

CapitaLand gained 23 cents to close at 3.06 Singapore dollars, and Keppel Land rose 14 cents to 1.62.

Singapore Airlines was up 48 cents to 11.60.

UOB bank was down 20 cents to 13.00, OCBC dropped a cent to 5.11 and DBS shed two cents to end at 9.70.

KUALA LUMPUR: Malaysian shares closed 2.1 percent higher.

The Kuala Lumpur Composite Index gained 15.0 points to close the day at 880.50.

IOI Corp rose 9.7 percent to 3.62 ringgit, Sime Darby added 2.7 percent to 5.65 and Kuala Lumpur Kepong climbed 4.1 percent to 9.00.

MESDAQ debutante Fibon declined 5.3 percent to 80 sen.

British American Tobacco slipped 2.8 percent to 43.75 ringgit and Carlsberg shed 1.7 percent at 3.52.

BANGKOK: Thai shares closed 1.30 percent higher.

The Stock Exchange of Thailand (SET) composite index rose 5.78 points to close at 451.72 points while the bluechip SET-50 index gained 4.47 points to 320.43 points.

Turnover was 2.95 billion shares worth 13.62 billion baht (394.95 million dollars).

Thailand's top energy firm PTT Plc rose 3.00 baht to close at 180.00 baht but its subsidiary PTT Exploration and Production slipped 1.00 to 108.00.

Another leading energy firm, Banpu, gained 2.00 to 224.00.

The country's biggest lender Bangkok Bank and Siam Commercial Bank each added 2.00 to 73.50 and 53.00 respectively.

JAKARTA: Indonesian shares ended 0.9 percent lower.

The Jakarta Composite Stock Index closed 12.22 points down at 1,351.76 in thin trade.

Telecommunications giant Telkom tumbled 5.6 percent to 6,750 rupiah.

Bank Mandiri lost 1.2 percent to 2,100 rupiah and coal miner Bumi Resources sank 2.2 percent to 890.

MANILA: Philippine shares closed 0.17 percent lower.

The composite index fell 3.10 points to 1,901.46 points, although the all-shares index rose 0.1 percent to 1,209.8 points.

Volume totalled 592 million shares worth 1.5 billion pesos (32.1 million dollars).

Philippine Long Distance Telephone Co. fell 1.18 percent to 2,085 pesos while its rival, Globe Telecom gained 1.3 percent to 775 pesos.

Bank of the Philippine Islands rose 2.6 percent to 39 pesos while Ayala Corp. gained 0.4 percent to 212 pesos.

WELLINGTON: New Zealand shares closed 0.43 percent higher.

The benchmark NZX-50 index ended 11.66 points higher at 2,707.59 on turnover worth 74.3 million dollars (44.1 million US).

Fletcher Building rose eight cents to 6.15 dollars, while Contact Energy added 27 cents to 7.20.

Market leader Telecom bucked the trend in the top rank, falling one cent to 2.34.

New Zealand Oil & Gas, which announced Wednesday it was buying a strategic stake in Pan Pacific Petroleum, rose one cent to 1.33 dollars.

MUMBAI: Indian shares rose 3.72 percent, above the key 10,000 points level on hopes that the central bank could cut rates as annual inflation eased to a nine-month low, dealers said.

The benchmark 30-share Sensex index rose 361.14 points to 10,076.43.