HONG KONG - ASIAN stock markets rose modestly in thin trade on Monday as shares in commodities producers and Japanese financials gained ground.

In Tokyo, the Nikkei 225 stock average edged higher by 7.65 points, or about 0.1, per cent to 8,747.17, and Hong Kong's Hang Seng Index added 0.7 per cent to 14,286.02.

Benchmarks in Singapore and Australia climbed more than 1 per cent, while those in Shanghai and South Korea traded flat.

Markets in Indonesia, Malaysia and the Philippines were closed.

With many investors away for the holiday and their books already closed for the year, trade across the region was quiet and marked by low volumes. The recent rash of government stimulus measures helped underpin sentiment despite worries that the first half of next year would see the global economy and company profits erode further.

'There's this expectation and hope that governments could put a floor in for the economy and therefore lead to a better second half in 2009,' said Mr Song Seng Wun, economist at CIMB-GK in Singapore.

Among the session's best performers were energy companies after oil prices hovered near US$40 (S$57.62) a barrel as concerns about supply from the Middle East flared along with fighting between Israel and Gaza.

Australia's Woodside Petroleum Ltd gained 5.7 per cent, top Japanese refiner Nippon Oil Corp. jumped 6.5 per cent, and Chinese upstream producer CNOOC rose 3.8 per cent in Hong Kong trade.

Japanese financials were higher amid reports the country's No. 2 non-life insurer, Mitsui Sumitomo Insurance Group Holdings Inc, was in merger talks with two smaller rivals to create the country's largest non-life insurer. Mitsui soared 8.3 per cent.

Light, sweet crude for February delivery rose US$1.65 to US$39.37 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract on Friday rose US$2.36 to settle at US$37.71.

The dollar weakened to 90.37 yen, down from 90.75. The euro traded higher at US$1.4244 from 1.4031.

On Friday in New York, Wall Street staged a modest advance after the government came to the aid of General Motors' financing arm, but worries about dismal holiday spending capped gains.

The Dow Jones industrial average rose 47.07, or 0.6 per cent, to 8,515.55, while the Standard & Poor's 500 index rose 4.65, or 0.5 per cent, to 872.80.

US stock futures fell early on Monday, pointing to a lower open on Wall Street.

TOKYO
Japanese share prices ended barely higher on Monday, overcoming early losses as dealers adjusted positions on the last full trading session of the volatile year.

The Tokyo Stock Exchange's benchmark Nikkei index rose a marginal 7.65 points or 0.09 per cent to close at 8.747.17.

Gains were larger on the broader Topix index of all the Tokyo Stock Exchange First Section issues, which finished up 8.19 points or 0.97 per cent at 854.77.

The Tokyo market opens for a half-day session on Tuesday before closing for holidays until Jan 5.

HONG KONG
Hong Kong share prices closed 1 per cent higher on Monday, supported by bargain hunting after four consecutive days of losses, dealers said.

The benchmark Hang Seng Index closed up 144.34 points at 14,328.48.

Turnover was light at 21.95 billion Hong Kong dollars (S$4.05 billion). Oil producer CNOOC surged 3.92 per cent to 6.90 dollars on a rebound in crude prices.

SHANGHAI
Chinese shares closed flat on Monday as steel makers' losses weighed on investor sentiment, dealers said.

The benchmark Shanghai Composite Index, which covers A and B shares, ended down 1.04 points or 0.06 percent at 1,850.48 on turnover of 37.1 billion yuan (S$7.8 billion).

The Shanghai A-share index lost 1.15 points, or 0.06 per cent, to 1,943.06 on turnover of 37.0 billion yuan, while the Shenzhen A-share index was down 4.47 points, or 0.75 per cent, at 594.31 on turnover of 18.8 billion yuan.

Malaysian and Indonesian stock markets were closed for a holiday. -- AP, AFP