SEOUL, South Korea - Asian stock markets mostly rose Thursday led by Hong Kong and Japan despite weak economic data that sent Wall Street lower and worries about tighter monetary policy that dragged down China shares. European markets rose. Japan's Nikkei 225 stock average gained 135.56 points, or 1.3 per cent, to 10,388.09 while Hong Kong's Hang Seng index recovered from early declines to gain 404.47, or 2 per cent, to 20,899.24. "The market held firm as investors bought back auto stocks," said Yutaka Miura, senior strategist at Mizuho Securities Co. Ltd. in Tokyo of Japan's performance. Toyota Motor Corp. rose 3.8 per cent to 4,130 yen, while Honda Motor Co. increased 3.7 per cent to 3,110 yen. Nissan Motor Co. also advance, gaining 3.1 per cent to 702 yen. In early Europe trade, the FTSE 100 index of leading British shares was up 1.1 per cent to 4,697.25. Germany's DAX rose 1 per cent to 5,405.28 and the CAC-40 in France was 1 per cent higher at 3,494.29. Bucking the trend were shares in China. The benchmark Shanghai Composite Index dropped 72.17 points, or 2.1 per cent, to 3,356.33. Worries have grown over whether a surge in Chinese bank lending to support the government's massive stimulus spending may be helping foment a stock bubble. The Shanghai benchmark has risen by about 90 per cent this year. "There is concern in the market about potential tightening," said Mark Tan, who helps manage about $15 billion of equities and bonds at UOB Asset Management in Singapore. China's bank regulator last week raised eyebrows when it said it would review capital adequacy as a way of cooling the lending frenzy. Elsewhere, Australia's benchmark gained 1.5 per cent after the unemployment rate held steady in July, bucking expectations of an increase amid the global recession. South Korea's Kospi erased earlier losses and closed up 0.4 per cent, while Singapore's market also turned higher to rise 0.3 per cent. Taiwan moved out of red and rose 0.3 per cent as did India's Sensex, which traded 0.3 per cent higher. In New York on Wednesday, stocks slipped on figures showing a sharper-than-expected contraction in the services sector and as investors shied from making big moves ahead of the government's monthly reading on job losses and the unemployment rate. Traders are growing anxious as they await the U.S. Labour Department's employment report for July due out Friday. Unemployment stands at a 26-year high of 9.5 per cent and is expected to eventually top 10 per cent. Investors are looking for the pace of layoffs to slow so the economy can heal. On Wednesday, the Dow Jones industrial average fell 39.22, or 0.4 per cent, to 9,280.97. The Standard&Poor's 500 index fell 2.93, or 0.3 per cent, to 1,002.72, while the Nasdaq composite index fell 18.26, or 0.9 per cent, to 1,993.05. Stock futures pointed to modest gains Thursday on Wall Street with Dow futures up 24 points, or 0.3 per cent, at 9,269. Oil prices recovered losses to rise above $72 a barrel in Asia after investors digested rising U.S. crude inventories and signs of a weak economy. Benchmark crude for September delivery was up 17 cents to $72.14 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Wednesday, the contract gained 55 cents to settle at $71.97. In currencies the dollar rose to 95.35 yen from 94.88 yen. The euro was lower at $1.4395 from $1.4409.

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