Asia: China stocks end up on industrial data; Nikkei boosted by weaker yen

Asian stocks closed higher on Thursday after Chinese industrial data showed recent policy measures are helping the world’s second-largest economy.

The Shanghai composite index rose 0.31% and Hong Kong's Hang Seng gained 0.83% following improved figures which suggested that recent policy support is helping to stabilise growth despite activity remaining subdued.

Industrial production improved to 6.1% in May from 5.9% the year before, beating expectations of 6% growth.

Capital Economics analysts said a recovery in construction activity was partly responsible for the rise, but warned activity in heavy industry still appears subdued, with growth in electricity output falling back from 1.0% year-on-year to 0.0%.

Elsewhere, retail sales data published by the National Bureau of Statistics of China were in line with forecasts at 10.1% in May,a slight improvement from 10% a month earlier. However, urban investment fell from 12% to 11.4% in May.

Read more: Chinese policy stimulus feeding through into investment

"Looking ahead, recent policy support efforts should continue to shore up economic activity in coming months," the think-tank said.

"In particular, we think the recent fall in market interest rates to multi-year lows will provide a boost to credit growth and that further cuts to the required reserve ratio and benchmark interest rates will ensure monetary conditions remain loose."

On Wednesday, the People's Bank of China's decision to cut its gross domestic product and inflation forecasts was taken as a bullish sign of possible future additional stimulus.

In Japan, the Nikkei 225 closed 1.68% higher, ending up for the first time in five days driven by a weaker yen against the dollar, which helped exporters. The Japanese currency was trading at ¥123.71 against the dollar on Thursday at 10:10 GMT.

Bank of Japan governor Haruhiko Kuroda said on Wednesday that the yen is unlikely to fall any more in relative terms as it is already “very weak”.

The governor added the dollar was unlikely to rise against the yen if the Federal Reserve hikes interest rates.

The Nikkei was also higher amid hopes that Greece will reach a deal with its creditors.

Australia's S&P/ASX gained 1.43% following better-than-expected jobs data from the Australian Bureau of Statistics, which showed a drop in unemployment and a surge in job additions.

Unemployment fell to 6% in May from 6.1% and the number of employed people rose by 42,000 compared with a 13,700 decline in April.

In company news, Australian oil and gas company Santos rose 2.48% and Oil Search gained 4.44% on firmer commodity prices.

Among mining stocks, Rio Tinto and its rival BHP Billiton advanced 0.55% and 0.33% respectively.

In New Zealand, the NZX index was up 0.94% after the Reserve Bank reduced interest rates for the first time in about four years. It cuts rates by 25 basis points to 3.25%, citing low inflationary pressures and weaker prospects for dairy prices.

“The weaker prospects for dairy prices and the recent rises in petrol prices will slow income and demand growth and increase the risk that the return of inflation to the mid-point would be delayed,” Reserve Bank Governor Graeme Wheeler said in a statement.

Read more: Kiwi interest rates cut, central bank signals more easing

South Korea's Kospi 200 compostive rose 0.08% after the central bank decided to lower its interest rate by 25 basic points to 1.5%, the fourth move since August last year.

The decision was made to offset any potential effects on the economy from the Middle East Respiratory Syndrome (Mers) outbreak.

Bank of Korea governor Lee Ju-yeol said: "A rate cut was needed to ease the impact of Mers, which has increased downside risks to our growth trajectory amid slowing exports.”

Mers has killed nine people in South Korea so far, and there is no vaccine or specific treatment to stop the outbreak.

N+1 Singer analysts noted that the economy is also under real pressure from the lack of global trade.