Asian stocks rose on Thursday as hopes for global economic recovery prompted investors to shift into riskier assets, while oil found support above $71 a barrel following OPEC's decision to keep output steady.

The investor shift kept the U.S. dollar on the defensive. It hit its weakest value in almost a year on Wednesday and was holding just above that level on Thursday.

As South Korea and New Zealand kept interest rates at record lows, Asian share markets were underpinned by a 0.5 percent gain in the Dow Jones industrial average <.DJI> and the Federal Reserve's Beige Book survey, which showed the U.S. economy was stabilizing although many key sectors remained weak.

That buoyed sentiment in Japan where the Nikkei index <.N225> gained 1.4 percent even though machinery orders' data pointed to weak capital spending in the world's No. 2 economy.

The MSCI index of Asia Pacific stocks traded outside Japan <.MIAPJ0000PUS> firmed 0.8 by late morning.

South Korea's KOSPI index <.KS11> increased 1.4 percent, helped by shipping and shipbuilding companies. Hanjin Shipping <000700.KS> and Hyundai Heavy Industries <009540.KS> rose 4.3 percent and 3.7 percent respectively after a rise in the Baltic Dry Index <.BADI>, a key freight indicator.

The Korean won and Korean September treasury-bond futures fell sharply after the Bank of Korea said it would maintain its current easy monetary stance. However, its comments reinforced market expectations it would be one of the first country's globally to start raising rates, possibly before the end of the year.

The BOK is probably among the most hawkish banks in the world right now and it might be one of the first central banks to hike interest rates, said Frederic Neumann, Asia economist at HSBC in Hong Kong.

There is always a risk of being the first mover because it has immediate exchange rate implications. I think to some degree that constrains the ability to hike early and aggressively.

DOLLAR DEFENSIVE

In Australia, a sharp fall in employment in August put pressure on the Aussie dollar but share prices edged up 0.5 percent with energy stocks Woodside Petroleum and Santos gaining 1 percent off the back of firm oil prices.

Oil was quoted at $71.88 a barrel, up more than 40 cents from Wednesday's closing level. It reached as high as $72.52 after OPEC agreed in Vienna to maintain current output and after the American Petroleum Institute reported a sharp fall in crude stocks.

Growing confidence the worst is over for the global economy continued to push investors into riskier assets, keeping the U.S. dollar under pressure. It dropped to its lowest level in nearly a year on Wednesday against a basket of currencies <.DXY> and was holding just above those levels on Thursday.

Gold prices are benefiting from dollar weakness. Spot gold was trading at $991.7 per ounce by 10:47 p.m. EDT, after topping $1,000 on Wednesday.

New Zealand kept interest rates at a record low 2.5 percent but indicated it was less inclined to cut again.

However, the kiwi dollar fell after Governor Alan Bollard told Reuters that the currency, which hit a one-year high on Wednesday, was overvalued and that markets were premature in pricing in higher rates from early 2010.

China's Shanghai index <.SSEC> fell 1 percent. Recent volatility in China's shares has made fund managers cautious about buying, a Reuters poll shows.

Hong Kong's Hang Seng Index <.HSI> took its cue from Wall Street, rather than China, and was up 1.4 percent.

Taiwan's benchmark TAIEX index <.TWII> reached a 14-month intraday high after the government named a new cabinet, raising hopes a financial services agreement with China can be signed soon.

Japan Australia China South Korea