(MENAFN- AFP) Tokyo stocks rallied Wednesday as the yen fell further against the dollar on US interest rate talk but most other Asian markets struggled as investors were spooked by the prospect of higher borrowing costs in the world's top economy.
Dollar demand has intensified since Federal Reserve boss Janet Yellen on Friday hinted at a possible hike as data point to continued economic improvement.
Figures showing US consumer confidence at its highest level in almost a year provided further evidence of a brighter outlook.
On Tuesday the Fed's vice chairman Stanley Fischer told Bloomberg TV that any movement in rates was dependent on data, adding that "employment is very close to full employment".
Focus is now on Friday's key jobs creation report, which could be pivotal in the Fed's decision-making ahead of next month's policy meeting, although there are some reservations about whether a move will be made then.
"The Fed's more upbeat mood and a summer of record highs on Wall Street have boosted the US dollar's yield appeal," Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney, told Bloomberg News.
"Payrolls is certainly very important, though there are strong indications that seasonal factors will ensure the headline reading will not provide the Fed with the slam dunk it needs for a September hike."
In afternoon trade the dollar bought 103.32 yen, up from 103.02 yen New York. It is also sharply higher than Tuesday's 102.42 yen in Asia and last week's levels below 100 yen. The euro also fell to $1.1134 from $1.1143 in US trade.
Adding to yen weakness was another poor indicator on Japan's factory output, which fuelled expectations the nation's central bank will widen its monetary easing programme to kickstart the economy.
The softness in the yen once again helped Japan's exporters and the Nikkei ended one percent higher, while Shanghai also edged up.
However, Hong Kong fell 0.2 percent, while Sydney closed down 0.8 percent and Seoul was 0.3 percent down while Singapore, Taipei and Manila all sank.
In early European trade London and Paris each dipped 0.1 percent and Frankfurt lost 0.3 percent.
The stronger dollar also hit oil prices, with West Texas Intermediate down 0.1 percent at $46.29 and Brent also 0.1 percent off at $48.30.
Both contracts tumbled Tuesday after the oil minister for key producer Iran reportedly said the country planned to ramp up output.
The comments come as the OPEC producer cartel -- of which Iran is a member -- and Russia prepare for a meeting next month aimed at addressing a global supply glut that has hammered prices.
- Key figures around 0800 GMT -
Tokyo - Nikkei 225: UP 1.0 percent at 16,887.40 (close)
Shanghai - Composite: UP 0.4 percent at 3,085.49 (close)
Hong Kong - Hang Seng: DOWN 0.2 percent at 22,976.88
London - FTSE 100: DOWN 0.1 percent at 6,817.60
Euro/dollar: DOWN at $1.1134 from $1.1143 late on Monday
Dollar/yen: DOWN at 103.32 yen from 103.02 yen
Pound/dollar: UP at $1.3098 from $1.3076
New York - DOW: DOWN 0.3 percent at 18,454.30 (close)
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