Asia: Rumor-Based Rally in Japan

Asian markets shrugged off Wall Street's slow day overnight and entered a surprise rally Thursday, led by the Nikkei during the afternoon session as rumors abounded.

The Nikkei gained 200 points, or 1.5%, to 13,389.90, and after a strong selloff in the past two weeks, China's Shanghai Composite Index gained momentum as mainland bargain hunters came back to fish for cheap deals among commodity and banking stocks. The index gained 98 points, or 2.9%, to 3446.24. In Hong Kong, the Hang Seng jumped 392 points, or 1.6%, to 24,264.63.

"China financials seem to be a major mover of this surge, while the U.S. stock market is still on schedule for a rebound," says Castor Pang, a buy-side strategist for Sun Hung Kai financial in Hong Kong. "Most investors are changing their mind for the short term, and becoming more optimistic about market direction."

Japanese stocks spiked sharply during the afternoon session, lifting Chinese financials and regional markets, amid a consecutive pair of rumors. The first rumor, which began circulating at the end of the morning session in Hong Kong, was that there was a trading error in Singapore-traded Nikkei call futures. ...