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Asian stocks led higher by Japan as Nikkei hits fresh 7-year high amid snap election rumours

HONG KONG – Asian stocks rose Wednesday, led by Tokyo’s Nikkei index, which hit a fresh seven-year high as the yen slumped further amid speculation of a snap Japanese election. In the absence of big moves on Wall Street, sentiment was also fuelled by hopes that Japan’s government would put off a tax hike.

KEEPING SCORE: Japan’s benchmark Nikkei 225 rose 1.4 per cent to 17,359.26 a day after the Asian heavyweight index closed above 17,000 for the first time since October 2007. South Korea’s Kospi gained 0.5 per cent to 1,973.01 and Hong Kong’s Hang Seng was little changed at 23,811.27. Markets fell in mainland China and Australia and rose in India, Indonesia and the Philippines.

ELECTION TALK: With U.S. markets eking out only a slight gain overnight, investors in Asia again latched on to speculation that Japan’s Prime Minister Shinzo Abe may call a snap election instead of going ahead with a planned second hike in consumption tax. Such a move would take pressure off Asia’s second biggest economy in the short term. It has suffered after the government raised the consumption tax in April to help stabilize tattered public finances.

THE QUOTE: The rumours and their effect on Japanese stocks “will be a key focus for Asian markets today,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “If true, this move will better synchronize government fiscal policy with central bank stimulus initiatives, improving confidence and the outlook for the domestic economy in the medium term.”

WALL STREET: U.S. stocks scratched out slight gains as investors awaited more corporate and economic reports to get a better feel for the economy’s strength. The Dow Jones industrial average climbed less than 0.1 per cent to 17,614.90. The Standard & Poor’s 500 rose 0.1 per cent to 2,039.68. The Nasdaq composite climbed 0.2 per cent to 4,660.56.

CURRENCIES: The dollar rose to 115.84 yen from 115.72 in late trading Thursday. The euro edged lower to $1.2465 from $1.2466.

ENERGY: Benchmark U.S. crude oil slipped 44 cents to $77.50 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 54 cents to close at $77.94 a barrel on Tuesday. Brent crude fell $1.15 to $81.24 on the ICE Futures exchange in London.