Japan a bright point in lacklustre Asia trade

Tokyo stocks made solid gains Wednesday as the yen halted its rally and energy and banking stocks rose, while elsewhere in the region trade was lacklustre after a weak lead from Wall Street.

The benchmark Nikkei 225 index climbed 0.9 percent, snapping a two-day losing streak as a drop in the safe haven currency lifted exporters -- making them more competitive overseas.

The dollar picked up against the yen Wednesday after comments from a senior US central banker suggested the Federal Reserve could hike interest rates as early as September.

William Dudley, head of the Fed's New York branch, said a rate hike was possible next month and that Wall Street investors were too "complacent" about the prospect of higher rates over the next year.

In Asia trade, the greenback rose to 100.83 yen from 100.30 yen in New York, where it briefly touched as low as 99.54 yen, falling under the 100 level for only the second time this year.

"Considering how much the yen has strengthened, Japanese shares are showing resilience," Chihiro Ohta, a senior strategist with SMBC Nikko Securities, told Bloomberg News.

Petroleum-linked stocks were among the top performers, with explorer Inpex soaring 6.46 percent and refiner JX Holdings jumping 3.37 percent.

Elsewhere investors were cautious, with Sydney ending flat while Seoul, Manila and Bangkok were all down.

But some energy stocks in other markets got a lift after oil prices held above $46 on hopes producers would decide to freeze output at a meeting next month.

Sydney-listed Oil Search gained 2.4 percent and GS Holdings Corp in Seoul climbed 1.3 percent.

- HK-Shenzhen link -

In Chinese markets, Shanghai was flat and Hong Kong lost 0.5 percent but Shenzhen gained 0.3 percent after news the government had approved plans to link trading between the Shenzhen and Hong Kong stock exchanges, paving the way for the long-awaited reform.

China launched a landmark "stock connect" between the Hong Kong and Shanghai bourses in late 2014, opening up its closeted share market to the outside world and giving foreign investors access to Chinese companies not quoted elsewhere.

Mainland China's second stock exchange, in the southern city of Shenzhen, was due to follow last year, but the launch was delayed by a market rout.

Preparations for the launch are expected to be finished in four months' time but a start date is subject to regulatory approval, the Hong Kong exchange said.

Also in Hong Kong, shares in the region's flag carrier Cathay Pacific plunged after the company reported its first-half profit dropped 82 percent from a year earlier due to a slowdown in China and intense competition from other airlines.

The company warned it faced a "difficult environment" in the coming months as weaker demand and huge fuel hedging losses have hit its bottom line.

Net profit for the first six months of the year plummeted to HK$353 million ($45.52 million), Cathay said in a statement issued to the Hong Kong Stock Exchange, causing stocks to tumble 7.3 percent to HK$11.94 in the afternoon.

In early European trade, London was down 0.2 percent, as Paris and Frankfurt lost 0.8 and 0.9 percent respectively.

- Key figures at around 0830 GMT -

Tokyo - Nikkei 225: UP 0.9 percent at 16,745.64 (close)

Shanghai - Composite: FLAT at 3,109.55 (close)

Hong Kong - Hang Seng: DOWN 0.5 percent at 22,799.78 (close)

Euro/dollar: DOWN at $1.1266 from $1.1277 Tuesday

Pound/dollar: UP at $1.3047 from $1.3042

Dollar/yen: UP at 100.83 yen from 100.29 yen

New York - DOW: DOWN 0.5 percent at 18,552.02 (close)

London - FTSE 100: DOWN 0.2 percent at 6,880.53