HONG KONG - ASIAN shares gained on Thursday as aggressive rate cuts and government actions to revive economic growth improved confidence, but plenty of other worrisome signals remained, supporting government bonds.

Oil extended the prior day's rally on signs Saudi Arabia had slashed supplies to customers, while the US dollar, which had recently attracted strong demand due to its safe-haven perception, fell to a one-month low against the euro.

Central banks are acting aggressively, helping ease some concerns about the global economy, especially as inflation drops worldwide. China on Thursday said the consumer price index fell to a 22-month low.

South Korea on Thursday cut interest rates by 1 percentage point, helping Seoul shares and the won currency hit around one-month highs. But plenty of uncertainties still remain, and not all investors were willing to add on risk.

Expectations for sharply slower growth through 2009 and renewed uncertainty about a US auto bailout kept regional bonds firm and European shares were seen inching lower.

'As a slew of dismal economic indicators have shown, the global economy is weak. We can't yet be optimistic,' said Yousuke Hosokawa, treasury department senior manager at Chuo Mitsui Trust and Banking in Japan.

The MSCI index for Asia-Pacific stocks outside Japan advanced 0.4 per cent as of 0740 GMT (3.40pm Singapore time), building on the previous day rally of 4.5 per cent.

Japan's Nikkei average rose 0.7 per cent to mark its fourth consecutive daily gain.

However, some major indexes in Asia such as in Shanghai and Australia fell, hit by a mixture of concerns about the global economy and uncertainty about whether the US Senate will now approve a rescue for auto makers after the plan cleared the lower house of the US Congress.

'The US economy is faced by numerous problems that a Big Three rescue is unlikely to solve,' said Yoshio Takahashi, a fixed-income strategist at Barclays Capital in Tokyo.

'The flight to quality into debt is thus unlikely to subside.' Corporate news has added to worries about global growth.

Major companies worldwide such as Rio Tinto are announcing steep job cuts as they seek ways to cope with a crisis of a magnitude not seen in decades.

Taiwan ended flat, but South Korea's Kospi gained 0.8 per cent, and the won currency surged 2.6 per cent against the dollar, after the central bank cut its key interest rate by an unprecedented 100 basis points to a record low 3 per cent.

Fearing 2009
The low-yielding Japanese yen was mixed against major currencies, with trading expected to remain slow ahead of the end of a tough year. Few expect 2009 to be any better.

The Asian Development Bank said on Thursday growth in developing nations in the region is seen slowing to an eight-year low of 5.8 per cent in 2009, joining the chorus of increasingly pessimistic calls made from brokerages to international bodies.

The dollar fell 0.3 per cent to 92.50 yen from late US trading.

The euro rose to as high as $1.3115 against the dollar on trading platform EBS, the highest since late October, reflecting that some investors are indeed willing to shed safer-havens such as the US currency. The euro was up 0.6 per cent at 121.45 yen.

Japanese government bonds (JGB) were steady to firm. The worries about a deeper global recession are supporting demand for safer, shorter-dated debt maturities.

The five-year JGB yield dropped a basis point to 0.900 per cent, while the two-year yield slipped half a basis point to 0.575 per cent .

Oil prices edged higher, extending gains by 70 cents to $44.22 a barrel . Opec is widely expected to announce more output cuts at its meeting next week, with signs that top oil exporter Saudi Arabia already pre-empting that outcome by curtailing supply.

SHANGHAI
Chinese shares closed down 2.28 per cent on Thursday after a key Beijing economic meeting failed to produce new measures to boost the economy, dealers said.

The benchmark Shanghai Composite Index, which covers A and B shares, closed down 47.44 points at 2,031.68 on turnover of 87.8 billion yuan (S$19.8 billion).

TOKYO
Japanese share prices closed up 0.70 per cent on Thursday after overnight gains on Wall Street and a breakthrough on a US auto sector rescue plan.

The benchmark Nikkei-225 index rose 60.31 points to 8,720.55. The broader Topix index of all first section issues climbed 14.70 points, or 1.76 per cent, to 849.25.

HONG KONG
Hong Kong share prices closed 0.2 per cent higher on Thursday, following gains of property stocks on hopes of an interest rate cut next week by the US Federal Reserve, dealers said.

The benchmark Hang Seng Index closed up 36.16 points to 15,613.90. Turnover was HK$61.42 billion (S$11.7 billion).

KUALA LUMPUR
Malaysian shares closed 0.7 per cent higher on Thursday on bargain hunting and window dressing activities with gains led by banking stocks and select blue chips, dealers said.

The Kuala Lumpur Composite Index rose 6.02 points to end the day at 860.68. -- AFP, BERNAMA, REUTERS