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Nikkei Markets

Asian equities rise amid bets of policy easing by ECB, Fed

South Korean stocks fall as North Korea tests missiles

HONG KONG (Nikkei Markets) -- Asian shares outside of Japan rose Thursday amid expectations of supportive monetary policies from major central banks. Losses in South Korean equities following a missile test by North Korea, however, capped the advance.

The Nikkei Asia300 Index rose 0.3% to close at 1,327.22.

Asian equities were buoyed by hopes of policy easing by the European Central Bank later Thursday and by the Federal Reserve next week. The ECB could potentially cut its key deposit rate by 10 basis points, pushing it further into the negative territory. According to data from Reuters, there is a 48% chance that the ECB would cut the deposit rate to -0.5% and a 52% probability it would keep it unchanged at -0.4%.

The Fed is expected to follow that up with an at least quarter percentage rate cut next Wednesday. There are chances that the U.S. central bank may prefer to be more aggressive and cut the fed rate by 50 basis points.

Expectations of easing by the ECB come in the backdrop of worries over the economic outlook and muted inflation. The Fed, meanwhile, has indicated a cut in interest rates amid economic weakness in Europe and China.

"Central banks are ready to once again retake the spotlight in a sequel to 2008 when they shackled volatility with coordinated slashing of interest rates," Alfonso Esparza, a senior market analyst at OANDA, said.

SK Hynix advanced 2.1% as investors overlooked the 89% year-on-year slump in the company's June quarter operating profit to focus on the improving outlook for the computer chip industry. SK Hynix's peer Samsung Electronics added 1.7%. South Korea's leading chemical firm LG Chem tumbled 4.95% following a 62% decline in April-June operating profit. Jollibee Foods slipped 6%, adding to yesterday's 8% decline after the Philippine company said it is buying unprofitable U.S. chain Coffee Bean & Tea Leaf.

South Korean assets underperformed on Thursday after North Korea launched two short-range missiles from a naval base on the country's east coast. South Korea's equity benchmark closed 0.4% lower and the South Korean won fell about 0.2%.

Earlier in the day, data showed that South Korea's economy grew by 1.1% quarter-on-quarter in the April-June period after contracting by 0.4% in January-March. Economists polled by Reuters had expected a 1% quarter-on-quarter growth.

Korea Shipbuilding & Offshore Engineering plunged 5.6% and Doosan Heavy Industries & Construction declined 3.8%.

Naver jumped 8.5% after the South Korean internet portal operator reportedly plans to spin-off its online payment business. The company on Thursday reported a 90% on-year decline in net profit in the June quarter.

Hyundai Mobis added 5.6% after the South Korean auto-parts maker said April-June operating profit increased 18% from a year earlier.

--Nimesh Vora

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