HONG KONG: Asian markets rose on Thursday, with Tokyo leading advances as the yen weakened against the dollar owing to dimming expectations of fresh monetary easing by the US Federal Reserve.

With few catalysts to drive action during the holiday season trade was light, although shares were kept buoyant by lingering hopes for a restart of sovereign bond-buying by the European Central Bank and new stimulus in China.

Tokyo rose 1.88 per cent, or 167.72 points, to 9,092.76, Sydney climbed 1.14 per cent, or 49.0 points, to 4,330.2 and Seoul closed flat, adding 0.95 points, to 1,957.91.

In the afternoon Hong Kong added 0.20 per cent while Shanghai was flat.

Exporters on Japan's Nikkei were the main beneficiaries of the weakening yen, which eased to a four-week low against the dollar.

The dollar bought 79.33 yen in afternoon Asian trade, up from 78.87 yen in New York late Wednesday.

“The current dollar/yen level is a big support for local shares, since large manufacturers forecast the dollar to average 78.95 yen this fiscal year,”Masayuki Doshida, Rakuten Securities senior market analyst in Japan, told Dow Jones Newswires.

A weaker yen makes exporters' goods less expensive overseas.

Honda Motor closed up 2.09 per cent while Mazda Motor was up 3.26 per cent, electronics giant Panasonic surged 5.52 per cent and Nippon Steel climbed 4.29 per cent.

Also on forex markets the euro bought $1.2280 and 97.45 yen compared with $1.2285 and 96.91 yen in New York.

Traders have an eye on Europe as concerns about Athens spiked again following a report in the Financial Times that Greece will call for a two-year extension to its tough austerity programme.

Prime Minister Antonis Samaras will make the request when he meets German Chancellor Angela Merkel and French President Francois Hollande next week, the newspaper said Wednesday.

“Concerns that this proposal may get short shrift when Greek PM Samaras meets with Mrs Merkel and other EU leaders next week is set to keep euro sentiment fragile at best,” National Australia Bank said in a note.

Wall Street provided very little direction for Asian traders.

New data from the United States showed inflation was flat and that national industrial production grew 0.6 per cent month on month in July, mainly driven by the auto sector.

Manufacturing in the New York area posted a surprise drop however.

The National Association of Homebuilders' activity index rose by two points to 37 — still low, but the highest level since early 2007, indicating greater optimism among companies that build housing.

The Dow edged down 0.06 per cent while the S&P 500 added 0.11 per cent and the tech-rich Nasdaq gained a more substantial 0.34 per cent.

Oil prices were mixed. New York's main contract, West Texas Intermediate for September, was up one cent to $94.34 and Brent North Sea crude for September fell $1.85 to $114.40.

Gold was at $1,602.12 at 0645 GMT, compared to $1,594.67 on Wednesday.