UPDATE: Asian Shrs Find Firmer Footing;China Gains Lift Mood

SINGAPORE -- Asian share markets were shaking off their earlier gloom Thursday as a rise for the China market helped offset a lackluster cue from U.S. stocks.

The Industrial Average slipped 0.3% on Wednesday, weighed by a weaker-than-expected U.S. jobs report from Automatic Data Processing.

"The recent U.S. market moves indicate investors are feeling fatigued, showing only tepid reactions to positive data," said Choi Seong-lak at SK Securities in Seoul.

But gains for China shares helped regional markets find a firmer footing. "The China market is sustaining its gain after opening higher, helping turn the Kospi higher," said Oh Tae-dong at Taurus Investment & Securities.

China's Shanghai Composite was up 3.5% while Hong Kong's Hang Seng was up 1.0% and Taiwan's main index was 1.0% higher. South Korea's Kospi was 0.3% higher and Australia's S&P/ASX 200 up 0.1% while New Zealand's NZX-50 climbed 0.6%. Japan's Nikkei 225 was flat after earlier weakness. DJIA futures were 15 points higher in screen trade.

Singapore's Straits Times Index was up 1.0% while Malaysia's main index was 0.4% higher and Indonesia's main index was up 1.3%. Philippine shares were down 0.8% and Thai shares were 0.8% higher.

Shanghai shares were higher after the Xinhua News Agency reported that the China Securities Regulatory Commission would promote the stable and healthy development of the country's capital markets via measures such as strengthening the markets' infrastructure and ensuring the smooth operation of the Growth Enterprise Market when it is launched. The report cited comments from CSRC vice chairman Liu Xinhua made in Beijing Wednesday.

Chinese real estate counters and banks were leading with China Vanke up 4.0%, Poly Real Estate Group up 3.4% and China Merchants Bank up 2.4%. "But we need to watch whether the gains are sustainable as the CSRC didn't launch any material measures," said Zhang Gang at Southwest Securities.

The Hong Kong market was getting a lift from gains for the China market. Macau gaming plays were sharply higher with Galaxy, Melco, SJM and Shun Tak each up by at least 4%, boosted by a report in the South China Morning Post newspaper that Macau casino revenue surged in August.

Dainippon Sumitomo Pharma was in focus in Tokyo and was up 3.0%. The company was in the final stage of talks to buy U.S. pharmaceutical maker Sepracor Inc. (SEPR), a person familiar with the matter said Thursday. While the person didn't specify a purchase price or when the deal would be concluded, the Nikkei reported earlier that Dainippon would spend an estimated Y250 billion to make the company a wholly owned subsidiary.

But financial stocks were weighing on the Tokyo market with Mitsubishi UFG down 2.2% while Mizuho FG slipped 1.4% and automotive stocks were weaker on strong yen concerns with Toyota Motor down 1.5% and Honda Motor down 2.4%.

Korean stocks reversed earlier falls as a rise for the China market supported sentiment. Banks were leading gains with KB Financial up 4.2% and Hana Financial up 6.8%.

Taiwan shares were also getting some support from gains for the China market. "It seems the stabilization of China stocks helped the market, and tech shares remain in focus," said Fubon Securities' Michael Lin. AU Opto was up 2.3%, Chi Mei Opto up 4.0% and Acer up 0.7%.

In Australia, gold shares were soaring with spot gold's rally on Wednesday. Newcrest Mining was up 6.5% and Lihir Gold up 6.1%.

New Zealand shares were led higher with Auckland Airport up 2.3% on news of a new passenger clearance systems for trans-Tasman flights. NZ Farming Systems Uraguay was up 6.5% supported by news Wednesday that Singapore-based commodity trader Olam International bought a 14.4% stake in the company.

The euro and U.S. dollar were moving off earlier lows as gains for China shares supported them against the safe-haven yen. The euro was at Y131.69 from Y131.44 late New York on Wednesday and $1.4275 from $1.4265. The U.S. dollar was at Y92.23 from Y92.13.

Japan government bonds lead September futures were unchanged at 139.44 while the 10-year JGB yield was down 0.5 basis point at 1.3% as the early decline for Tokyo stocks prompted buying of the safe haven asset.

Spot gold was at $976.45 per troy ounce, down $2.15 from New York's close after it rallied to a three-month high on Wednesday.

"Historically, the time is ripe for a sustained advance, as recent bull trends have occurred in odd numbered years, with the breakouts occurring during September," said Barclays Capital. "With price action unfolding in terms very similar to 2005 and 2007, we look for higher gold over the next several quarters in both dollar and euro terms."

LME copper was at $6,145 per ton, down $28 from the London kerb. But Barclays Capital analyst Yingxi Yu said that the copper market looked well supported despite coming down sharply from highs of last week. "We're looking at higher support levels across the metals complex; markets need to see that the rebound from a recession is continuing, and we are confident of this happening."

October Nymex crude oil futures were up 28 cents at $68.33 per barrel on Globex, after settling flat in New York.