Asian stocks closed mostly up on Wednesday after a drop in oil prices boosted sentiment, but the G8 industrial powers issued fresh warnings about threats to the global economy.

Indian and Chinese shares led the rise, jumping more than 4.5 per cent and 3.7 per cent respectively, but are still far below highs hit some months ago following a steep plunge this year.

Oil was trading around US$138 (S$188) per barrel on Wednesday, sharply lower than recent all-time highs around US$147 dollars.

That allayed some concerns about surging global inflation, which threatens slower economic growth.

But the cost of oil, food and other commodities still remains high by historical standards, and the Group of Eight (G8) rich nations warned again on Wednesday about the threat that posed to the global economy.

The leaders of the G8 nations said in their communique after a summit in Japan that they had 'agreed on the need to address' rising oil and food prices and global inflationary pressures.

Elsewhere in Asia on Wednesday, Hong Kong shares rallied nearly three per cent, Australia was up 1.6 per cent and Singapore ended just over one per cent higher.

The Japanese stock market edged up 0.15 percent. The country's core machinery orders were unexpectedly strong in May, but experts warned that had failed to dispel gloom about prospects for Asia's largest economy.

Taiwanese stocks closed little changed, but the South Korean bourse fell nearly one per cent. Among smaller Asian markets, Malaysia, Indonesia, the Philippines and New Zealand were up, but Thai stocks closed down.

Asian stocks were helped by a Wall Street rally on Tuesday and comments by Mr Ben Bernanke, the head of the US central bank, indicating continued steps to deal with a credit crunch after a financial crisis.

But investor sentiment could be hit over the rest of the week after Iran on Wednesday test-fired a missile it said was capable of reaching Israel.

The test angered the US as fears grow that a standoff over the contested Iranian nuclear drive could lead to war.

KUALA LUMPUR
Malaysian share prices closed up 1.7 per cent on Wednesday due to bargain-hunting in selected blue-chips on the back of strong gains on Wall Street, dealers said.

The Kuala Lumpur Composite Index gained 18.56 points to 1,139.81.

HONG KONG
Hong Kong shares rebounded 2.8 per cent on Wednesday, recovering from the previous session's steep fall, after the U.S. Fed said it may keep open a lifeline for Wall Street banks battered by the credit crisis.

The Hang Seng Index trimmed gains in early afternoon trade amid reports that Iran had test-fired missiles, but the sudden pullback brought more bargain hunters into the market towards the end of the session.

Shares in Europe's largest bank, HSBC Holdings, jumped the most in more than three months, leading gains on the main index.

The Hang Seng Index closed up 585 points at 21,805.81 in a broad-based rally, after losing 3.2 per cent on Tuesday.

Mainboard turnover rose to HK$74.55 billion (S$13 billion) from HK$63.74 billion on Tuesday.

SHANGHAI
Chinese share prices closed 3.75 per cent higher on Wednesday led by oil refiners as a sharp decline in oil prices eased concerns over rising fuel costs and inflation, dealers said.

Banks and property developers also outperformed as an expected slowdown of June's inflation data helped investors to alleviate fears on further monetary tightening measures.

The benchmark Shanghai Composite Index, which covers both A and B shares, closed up 105.60 points at 2,920.55 on turnover of 105.8 billion yuan (S$21 billion).

The Shanghai A-share index rose 111.12 points, or 3.76 per cent, to 3,063.57 on turnover of 105.6 billion yuan, while the Shenzhen A-share index was up 29.14 points, or 3.24 per cent, to 928.23 on turnover of 51.7 billion yuan.

TOKYO
Japanese shares closed 0.15 per cent higher Wednesday as Wall Street rallied on lower oil prices and hopes that the central bank will do more to ease a credit squeeze, traders said.

The Tokyo Stock Exchange's benchmark Nikkei index firmed 19.03 points to end at 13,052.13. The broader Topix index of all first-section shares gained 2.02 points or 0.16 per cent to 1,285.53. -- REUTERS, AFP