Updated from 1:23 a.m. EST

Asian stocks closed higher, with stocks in Japan rising amid speculation the country's central bank would soon cut interest rates to revive its contracting economy.

Japan's Nikkei 225 stock average rose 0.6% to 8667.23. The Hang Seng index in Hong Kong finished with a gain of 0.2%, while the S&P/ASX 200 index in Australia closed higher by 0.3%.

Speculation has grown that the Bank of Japan would cut its interest rate, now at 0.3%, after the

Federal Reserve

in the U.S. on Tuesday slashed its benchmark rate to a range between zero and 0.25% -- the lowest ever.

Investors sold exporters in line with a surging yen, which has hit 13-year highs against the dollar.

The yen stood at 87.87 to the dollar in Tokyo Thursday, compared with 87.27 in New York late Wednesday.

Oil prices rose 25 cents to $40.31 a barrel in electronic trading on the New York Mercantile Exchange.

Shares of


(HMC) - Get Report

declined 3.5% after Japan's No. 2 automaker slashed its annual profit forecast.


(SNE) - Get Report

declined 0.5%.

Financial stocks in Japan closed with gains.

Stocks in Europe were trading mixed. The FTSE 100 index in London fell 0.1%, while the DAX in Frankfurt rose 0.7%.

Premarket futures in the U.S. were indicating a mixed open for stocks on Wall Street Thursday.

On Wednesday, stocks ended a choppy trading session with losses as investors were dealt another round of earnings reports and weighed a cut in oil production from OPEC.


Dow Jones Industrial Average

ended down 99.8 points, or 1.1%, at 8824.34, and the

S&P 500

lost 8.76 points, or 1%, to 904.42. The


finished down 10.58 points, or 0.7%, at 1579.31.

Copyright 2008 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.