CBACD Commonwealth Bank of Australia

Asian stock markets were broadly higher early Tuesday, with Japanese equities leading as solid U.S. manufacturing data helped weaken the yen.

The Nikkei Stock Average was up 0.8%, Korea's Kospi rose 0.7% and Singapore's FTSE Straits Times Index gained 0.2%. Chinese markets are shut for the week. Hong Kong's Hang Seng Index, however, reversed early gains and was down 0.2%.

"We're up based on a weaker yen," said Alex Furber, senior client services executive at CMC Markets. "We've had some fairly positive data on the U.S. side last night, and [some market players believe] this is a case for a rate hike."

The U.S. September purchasing managers' index -- a key measure of factory activity—jumped to 51.5, shifting back into expansionary territory, following a surprise dip to 49.4 in August.

The stronger manufacturing numbers sent the yen down 0.5% against the dollar, as the market's appetite for risk returned. Japanese exporters benefited, with Honda Motor rising 2.2%, Olympus adding 4.1% and Panasonic gaining 1.6%.

The data further supported expectations for an interest-rate increase by the U.S. Federal Reserve at its December meeting. According to CME Group's Fedwatch tool, the market expects a 62.1% probability of a change in rates, which was higher than the previous day.

Elsewhere in Japan, financial stocks rebounded following a recent selloff due to concerns about slow growth, low interest rates and the contagion from a troubled European banking sector. The Topix banking subsector added 2.1%, while among individual banks, Mitsubishi UFJ Financial Group gained 2.3% higher and Sumitomo Mitsui Financial Group rose 2%.

In Australia, stocks were retreating from five-week highs ahead of the Reserve Bank of Australia's decision on interest rates later Tuesday, the first under new governor Philip Lowe. The S&P/ASX 200 was last down 0.2%, while in New Zealand, the NZX-50 index was off 0.4%.

Financial stocks in Australia consolidated after gains in the previous session. Commonwealth Bank of Australia was 0.4% lower and Westpac Banking Corporation was down 0.3%.

Meanwhile, commodities prices were mostly lower, as a stronger dollar made the dollar-denominated products more expensive to buy for those holding other currencies. Brent crude was down 0.6% at $50.60 a barrel, while gold was down 0.1% at $1,310.92 a troy ounce.

Among other currencies, the British pound was relatively stable against the dollar in Asian trade, off 0.1% recently, after declining 1.1% Monday. The sterling's decline came after U.K. Prime Minister Theresa May announced she would trigger Article 50 by the end of March 2017, formally starting the clock on the country's two-year deadline to exit from the European Union.

Kosaku Narioka and Kenan Machado contributed to this article.

Write to Ese Erheriene at ese.erheriene@wsj.com

(END) Dow Jones Newswires

October 03, 2016 23:35 ET (03:35 GMT)

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