Asia stocks rally, early US rate hike unlikely

Asian markets rose Friday morning following another record close on Wall Street as the likelihood of a US interest rate hike in the near term dwindled, with Tokyo hitting a new 15-year high.

Chinese shares were again the stand-out performers on hopes that Beijing will announce fresh monetary easing measures after more disappointing economic indicators.

Tokyo reversed a morning sell-off to end 0.30 percent higher, adding 61.54 points to 20,264.41 -- its best finish since April 2000, while Shanghai surged 2.83 percent, or 128.17 points, to 4,657.60.

Hong Kong was 1.61 percent higher in late trade.

Seoul closed 1.10 percent up, gaining 23.29 points to 2,146.10 while Sydney ended flat, edging 2.4 points higher to 5,664.7.

On Wall Street the S&P 500 closed at another all-time high thanks to strong earnings results and a multi-billion-dollar pharma merger.

A disappointing reading on US new home sales indicated the economy was still not firing on all cylinders, which suggests it is not yet ready to absorb a Federal Reserve rate rise from record lows. On Wednesday, minutes from the Fed's April policy meeting showed board members had similar concerns.

The S&P 500 gained 0.23 percent to another record high, the Nasdaq rose 0.38 percent and the Dow was flat.

"The question of when and how fast the US Fed begins to lift interest rates remains the dominant macro issue for equity markets and will be front of mind for traders," Ric Spooner, chief market analyst in Sydney at CMC Markets, told Bloomberg News.

"Some relief on expectations for Fed tightening may be enough to see bargain hunters start to return in earnest."

With rate hike expectations narrowing the dollar eased to 120.74 yen in Asian trade, from 121.07 yen in New York late Thursday.

- China stimulus hopes -

The greenback's losses extended after the Bank of Japan held off adding to its bond-buying stimulus and gave a more upbeat summary of the economy.

The euro edged up to $1.1158 and 134.72 yen against $1.1112 and 134.52 yen.

Shares in Shanghai and Hong Kong resumed their upward trend after preliminary figures on HSBC's gauge of China's manufacturing showed activity continued to contract in May.

The data is the latest showing the world's number two economy is struggling to get back on track, raising hopes for further stimulus measures, on top of the three interest rate cuts since November.

Also in Hong Kong Goldin Properties and Goldin Financial, which slumped more than 40 percent on Thursday wiping billions off their value, recovered some of their losses. Properties added five percent in afternoon trade and Financial was up three percent.

But Hanergy Thin Film Power, which dived 47 percent Wednesday, remained suspended.

Oil prices were lower. US benchmark West Texas Intermediate for July delivery eased 11 cents to $60.61 while Brent crude for July fell 18 cents to $66.33 in afternoon trade.

Gold fetched $1,209.01 compared with $1,209.50 late Thursday.

In other markets:

-- Taipei added 0.63 percent, or 60.24 points, to 9,638.80.

-- Wellington rose 0.12 percent, or 6.75 points, to 5,776.02.

Warehouse Group was up 2.14 percent at NZ$2.86 and Infratil gained 0.31 percent to close at NZ$3.22.